110100900100300 400500OUTPUT (Billions of dollars)200AD1600700800The following table lists several determinants of aggregate demand.Fill in the missing values in the table by selecting the change in each scenario required to increase aggregate demand.Change Required to Increase ADInterest ratesDomestic currency value relative to the foreign currencyWealthTaxes 4. Determinants of aggregate demandThe graph below is associated with a hypothetical country. Consider an increase in aggregate demand (AD). Specifically, aggregate demand shifts tothe right from AD₁ to AD2, causing the quantity of output demanded to rise at each price level. For instance, at a price level of 140, output is now$400 billion, where initially it was $300 billion.PRICE LEVEL17016015014013012011010090AD2AD1?

4. Determinants of aggregate demand The graph below is associated with a hypothetical country. Consider an increase in aggregate demand (AD). Specifically, aggregate demand shifts to the right from AD₁ to AD2, causing the quantity of output demanded to rise at each price level. For instance, at a price level of 140, output is now $400 billion, where initially it was $300 billion. PRICE LEVEL 170 160 150 140 130 120 110 100 90 +--+ 1 1 1 AD2 AD₁

4. Determinants of aggregate demand The graph below is associated with a hypothetical country. Consider an increase in aggregate demand (AD). Specifically, aggregate demand shifts to the right from AD₁ to AD2, causing the quantity of output demanded to rise at each price level. For instance, at a price level of 140, output is now $400 billion, where initially it was $300 billion. PRICE LEVEL 170 160 150 140 130 120 110 100 90 +--+ 1 1 1 AD2 AD₁

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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7. The long-run aggregate supply curve and short-run adjustments Suppose an economy's short-run aggregate supply curve (SRAS), current equilibrium aggregate price level (P₁), and real GDP (Q1) are shown on the graph that follows. The economy currently has Natural Real GDP (QN) of $6 trillion. Use this information to place the orange long-run aggregate supply curve (LRAS, square symbols) in the correct position on the graph. 20 PRICE LEVEL 0 2 4 6 Q₁ REAL GDP (Trillions of dollars) 8 SRAS 10 LRAS
3. Why the aggregate demand curve slopes downward The graph below shows the aggregate demand (AD) curve for a hypothetical economy. At point X, the quantity of output demanded is $500 billion, and the price level is 120. Moving up along the AD curve from point X to point Y, the quantity of output demanded falls to $300 billion, and the price level rises to 140. PRICE LEVEL 170 160 150 140 130 120 110 100 90 Y X AD (?
The following graph shows an aggregate demand curve (AD) illustrating the inverse relationship between the price level and the quantity of Real GDP in the United States. During World War II, the United States increased military spending. Show the effect of the following scenario on the aggregate demand curve by dragging the curve or moving the point to the appropriate position. Note: Tool tip: To move the curve, click and drag any part of the curve. The curve will snap into position, so if you try to move it and it snaps back to its original position, just try again and drag it a little farther. PRICE LEVEL Aggregate Demand I I " I 1 REAL GDP AD AD (?)
QUESTION 1 Aggregate Demand (AD) Is drawn with price level, average price for everything in the economy relative to the base year price, (not the dollar price) on the vertical axis and Real GDP demanded on the horizontal axis. Use the numbers from the following table and calculate the Real GDP Demanded using expenditure approach of GDP, and plot all the points on the Aggregate Demand. Connect all the points to draw the aggregate demand. [Review Chapter 5 powerpoints, textbook and Internet source to find what numbers have tolbe added to get each of the points In the Aggregate Demand curve.] (国 Real GDP Demanded (AD): C+l+G+ (X-M) Real GDP Supplied: Ageregate Supply (AS) $680 Price Level 110 $400 $185 $150 $55 $50 115 390 180 150 50 50 720 120 380 175 150 45 50 750 125 370 170 150 40 50 780 130 360 165 150 35 50 810 8.
A Moving to another question will save this response. Question 26 The accompanying table shows the aggregate demand and aggregate supply schedule for a hypothetical economy. Real Domestic Output Demanded Real Domestic Output Price Level (in Billions) (Index Value) Supplied $ 500 350 $ 3,500 1,000 300 3,000 1,500 250 2,500 2,000 200 2,000 2,500 150 1,500 3,000 100 1,000 a. If the quantity of real domestic output demanded increased by $1,000 at each price level, the new equilibrium price level and quantity of real domestic output would be? I b. At the price level of 150, what will happen to the levels of output supplied and output demanded? what will generally happen in the economy? For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac). 自Q
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 Demand
Assume that the accompanying graph depicts aggregate supply and demand conditions in an economy. Full employment occurs when $5 trillion of real output is produced. The economy is currently in equilibrium at point A. Price Level (average price) 260 240 220 200 180 160 140 120 100 0 1 A AS₁ 2 3 4 5 6 7 AD₁ Real Output (in trillions of dollars per year) 8 Tools EQ Instructions: In parts a, b, and d, enter your responses as a whole number. a. What is the equilibrium rate of output? $ trillion per year b. How far short of full employment is the equilibrium rate of output? $ trillion c. On the graph, illustrate a shift of aggregate demand that would change the equilibrium rate of output to $5 trillion. Instructions: Shift the aggregate demand curve (AD1) such that the equilibrium in the macro model is at $5 trillion. Then use the tool provided 'EQ' to label the new equilibrium. d. What is the price level at this full-employment equilibrium?
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Suppose that the aggregate demand and aggregate supply schedules for a hypothetical economy are as shown in the following table: Amount of Real GDP Demanded $ 600 $ 700 $ 800 $ 900 $1000 Price Amount of Real GDP Supplied $500 $1200 $400 $1000 $300 $200 $100 $ 800 $ 600 $ 400 a. Use the above data to graph the aggregate supply and aggregate demand curves. b. What are the equilibrium price and equilibrium level of real GDP? C. When this economy reaches its equilibrium GDP in this example, is it also operating at potential GDP? Explain why or why not.
Note: Line segments will automatically connect the points. PRICE LEVEL (Billions of dollars) 200 160 120 0 80 160 240 REAL GDP (Index numbers) The equilibrium price level is 320 400 Initial AD The change in government spending the multiplier effect. SRAS New AD ✓, and the equilibrium level of real output is Suppose that the government spending increases by $16 billion and the expenditure multiplier in this economy is 5. On the previous graph, use the purple points (diamond symbols) to illustrate the effect of the increase in government spending on the aggregate demand (New AD) curve. the equilibrium level of real output by . The price level increase