4. Draw the aggregate demand and aggregate supply graphs in a three-panel model: In the first graph, showaggregate demand on the graph and aggregate supply in the immediate short run. In the second graph,again show aggregate demand, but this time show aggregate supply in the short run. Finally, in the lastpanel, show aggregate demand and aggregate supply in the long-run. Be sure to label each axis and eachcurve in each graph. (Be careful not to leave this section too brief: to get a full score on it, you should writeno less than two paragraphs on this topic alone. The graphs you prepare should be referred to in the paperas exhibits.)

Exhibit 2: The short run states that in a certain period in the future , one input is fixed while…

Answered: 4. Draw the aggregate demand and…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

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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 (?
12. What are the three primary measures used in macroeconomics to assess the performance of an economy? 1) 2) work and actively seeking work. The opportunity cost of ( of goods and services that could have been produced if the unemployed workers would have worked. ) provides an overall indicator of output or production in the economy _) is the state a person is in if he or she cannot get a job despite willing to ) is the production _) tracks the overall increase in the level of prices in the economy. Each 3) ( measure is important for tracking the short-run and long-run health of the economy and for creating macroeconomic models to address important policy questions.
1. This question asks you to do a comparative staties analysis in the market for rice. The following graph depicts the initial market equilibrium for rice. For each seenario, determine (i) whether demand or supply is affected, (i) in which direction the curve(s) shift, and (iii) how the equilibrium changes. a. com (a substitute for rice) is now considered by doctors to be more healthy than rice b. scientists developed a new more productive technology for growing rice c. consumers' incomes rose and rice is a nommal good d. a hurricane destroyed a majority of rice crop e wages of agricultural workers rise
4. Consider the macroeconomic balance sheets of the following economies. As a policy analyst what would be your monetary and fiscal policy advice in both cases? Explain your answer. Country A Country B GDP Growth Rate: 7% GDP Growth Rate: 0.5% Inflation: 9% Inflation: 2.1% VIX Index (Equity Market Volatility Index): 99 VIX Index (Equity Market Volatility Index): 63 Unemployment: 5% Unemployment: 7% Exchange Rate Volatility: High Exchange Rate Volatility: Low Budget Deficit and Government Borrowing as a share of GDP: High Budget Deficit and Government Borrowing as a share of GDP: High Oil Exporter: Yes Oil Exporter: No
Suppose that the aggregate demand and aggregate supply schedules for a hypothetical economy are as shown in the following table: (18 points) Amount of Real GDP Demanded Price Amount of Real GDP Supplied $ 600 $500 $1200 $ 700 $400 $100O $ 800 $300 $ 800 $ 900 $200 $ 600 $1000 $100 $ 400 Use the above data to graph the aggregate supply and aggregate demand curves. What are the equilibrium price and equilibrium level of real GDP? When this economy reaches its equilibrium GDP in this example, is it also operating at potential GDP? Explain why or why not.
2. Over the past few years, one of the most closely monitored economic variables has been the inflation rate, which measures the change in the price level. Measuring it is complicated because different prices change by different amounts and sometimes in different directions (for example, the price of college tuition has been steadily rising for decades, whereas the price of TV sets has been decreasing). We can use the expenditure function to aggregate the change in the price level, by asking how much more it costs to achieve the same utility level under the new prices. That is, if the prices change from (P₁, P₂) to (P₁, P₂), where p₁ > p₁ and pź > P₂, we can define the inflation rate as: b. i 1 1 Suppose Bebel has a Cobb-Douglas utility, U = 9₁²9₂², and an income level of Y = 1600. Suppose p₁ = 100 and p = 100 so the price of good 1 doesn't change, but the price of good 2 increases from p₂ = 16 to p2 = 25. a. Calculate Bebel's optimal consumption bundle and utility level at the initial…
Suppose that United States produces 10,000,000 barrels of oil and 1,000 bushels of wheat each week. Suppose that China produces 14329 barrels 14329 barrels of oil and 14329 bushels 14329 bushels of wheat each week. In autarky, what is the largest amount of wheat United States can consume every week? amount of wheat per week:___________ bushels What does the term autarky refer to? a. a major argument against globalization b. a situation where one country does not engage in trade with other c. countries d. the process of negotiating terms of trade between two countries e. government policies meant to reduce international trade
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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.

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