25- Which of the following statements is true in a situation where labor productivity increases in an economy? a) aggregate supply decreases B) aggregate supply shifts to the right NS) aggregate supply shifts to the left D) aggregate demand shifts to the right TO) aggregate demand shifts to the left
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:25-Which of the following statements is true in a situation where labor productivity increases in an economy? |
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- (3) "The aggregate demand curve slope slopes downward because when the price level is lower, people can afford to buy more, lead to the rise in aggregate demand. When price rises, people can afford to buy less, resulting to the fall in aggregate demand. It is therefore very much an extension of the Law of Demand in Microeconomics." Is this a good explanation of the shape of the AD curve? Why or why not?“The oil Price run-up of 2007-08 was caused by strong demand confronting stagnating world production. Although the causes were different, the consequences for the economy appear to have been very similar to those observed in earlier episodes, with significant effects on overall consumption spending and purchases of domestic automobiles in particular. The experience of 2007-08 should thus be added to the list of recessions to which oil prices appear to have made a material contribution.” Source: Hamilton, J.D., 2009. Causes and Consequences of the Oil Shock of 2007-08 (No. w15002). National Bureau of Economic Research. a) Oil price shocks have an evident impact on the short run aggregate supply curve. With the help of a graph demonstrate how rising oil prices affect the SRAS and explain what other factors can cause this shift. b) Different theories…Suppose the economy is operating at potential GDP when It experiences an increase in export demand. How might the economy increase production of exports to meet this demand, given that the economy is already at full employment?
- From the information provided, determine whether you are given an Aggregate Supply or Aggregate Demand Schedule and, if Aggregate Supply, the time frame associated with the price level and output HINT: You may want to plot out the points on a graph. 6 Price Level 27:26 120 121 122 123 124 Multiple Choice Immediate Short Run Aggregate Supply Long Run Aggregate Supply Short Run Aggregate Supply Output (in billions) $550 555 558 561 565 Aggregate Demand10-8. Assume that the position of a nation's aggregate demand curve has not changed, but the long-run equilibrium price level has declined. Other things being equal, which of the following factors might account for this event? a. An increase in labor productivity b. A decrease in the capital stock c. A decrease in the quantity of money in circulation d. The discovery of new mineral resources used to produce various goods e. A technological improvement51) Which of the following both shift aggregate-demand curve to the right? an increase in taxes and at a given price level consumers feel more wealthy a decrease in taxes and at a given price level consumers feel less wealthy an increase in taxes and at a given price level consumers feel less wealthy a decrease in taxes and at a given price level consumers feel more wealthy
- 120 116 112 108 104 100 10 20 30 40 50 60 70 80 OUTPUT (Billions of dollars) Suppose the government passes a law that significantly increases the minimum wage. The policy will cause the natural rate of unemployment to . This will result in which of the following? A shift the long-run aggregate supply curve to the right No effect on the long-run aggregate supply curve A shift the long-run aggregate supply curve to the left Left No shift In the following table, determine how each event affects the position of the long-run aggregate supply (L Right Direction Curve Shift The government allows more immigration of working-age adults. For environmental and safety reasons, the government requires that the country's nuclear power plants be permanently shut down. A natural disaster destroys a significant amount of the economy's production facilities. PRICE LEVELQuestion 2: Do you agree with the following statement? Carefully explain your answer. “During the early stages of the COVID-19 pandemic government-imposed measures have forced many businesses to produce below their potential level of output. This means that the Long Run Aggregate Supply Curve of the Australian economy has shifted to the left leading to an economic recession.”10. The table below shows the aggregate demand and short run aggregate supply schedules of India. The potential aggregate output of India is 1050 billion rupees. Aggregate Price Level Real GDP demanded Real GDP supplied in the (billions of rupees) short run (billions of rupees) 100 1150 1050 110 1100 1100 120 1050 1150 130 1000 1200 140 950 1250 150 900 1300 160 850 1350 a) Represent the above information in an appropriately labelled diagram. b) What are the short run equilibrium price level and aggregate output? c) Calculate the output gap, and state what type of gap the economy is facing.
- In 2013, the economy of Boonton had an aggregate demand and aggregate supply according to the following schedule: Price Level Aggregate Demand Short-Run Aggregate Supply Long-Run Aggregate Supply 80 $1405 $1075 $1365 90 $1370 $1150 $1365 100 $1335 $1225 $1365 110 $1300 $1300 $1365 120 $1265 $1375 $1365 130 $1230 $1450 $1365 140 $1195 $1525 $1365 What was Boonton’s long-run equilibrium output in 2013?The following graph shows an increase in aggregate demand (AD) in a hypothetical country. Specifically, aggregate demand shifts to the right from AD1 to AD2, causing the quantity of output demanded to rise at all price levels. For example, at a price level of 140, output is now $400 billion, where previously it was $300 billion. 170 160 150 140 - 130 AD2 120 110 AD, 100 90 100 200 300 400 500 600 700 800 OUTPUT (Billions of dollars) The following table lists several determinants of aggregate demand. Complete the table by indicating the change in each determinant necessary to increase aggregate demand. Change Needed to Increase AD Wealth Taxes Interest rates The value of the domestic currency relative to the foreign currency PRICE LEVEL34) Unemployment would increase and prices would decrease if aggregate demand shifted left aggregate demand shifted right aggregate supply shifted left aggregate supply shifted right
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