5. An economy is initially in equilibrium, both in the short-run and in the long-run. Using the AD, SRAS, and LRAS curves, show and explain what would happen to the equilibrium aggregate price and output in both the short-run and the long-run if the following scenario occurs. a. Oil production increases significantly as OPEC and non-OPEC countries have agreed to raise their production quota, and the government anticipates the situation by implementing a contractionary fiscal policy. b. COVID 19 pandemic has forced the government to initiate a total lock down.

5. An economy is initially in equilibrium, both in the short-run and in the long-run. Using the AD, SRAS, and LRAS curves, show and explain what would happen to the equilibrium aggregate price and output in both the short-run and the long-run if the following scenario occurs. a. Oil production increases significantly as OPEC and non-OPEC countries have agreed to raise their production quota, and the government anticipates the situation by implementing a contractionary fiscal policy. b. COVID 19 pandemic has forced the government to initiate a total lock down.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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4.1 Why does the short-run aggregate supply curve slope upward? 4.2 Explain why the long-run aggregate supply curve is vertical. Then, (verbally and graphically) explain how each of the following events would affect the long-run aggregate supply curve. a. A lower price levels b. A decrease in the labor force c. A decrease in the quantity of capital goods d. Technological change
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on Indicate whether the following factor will affect aggregate demand (AD) or aggregate supply (AS) and whether the effect would be an increase or a decrease. Then indicate what will happen to the price level and the level of Real GDP and what type of equilibrium will result assuming that the economy is initially in long-run equilibrium. a) A decrease in the nominal wage rate. b) A decrease in exports. c) A decrease in the exchange rate. d) The discovery of vast new oil field in AD no effect decrease + increase no effect AS increase no effect increase increase decrease decrease decrease Real GDP increase decrease increase increase Equilibrium recessionary gap ⇒ inflationary gap inflationary gap inflationary gap AP ? Q Fir
18 19 20 21 22 23 24 25 26 28 AS AS, AS3 P3 AD Q2 Q, Q3 Real Domestic Output Refer to the graph. If aggregate supply shifts from AS1 to AS2, what will happen to price level and real domestic output? ( For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac). 10pt 三v A V Ix B Paragraph Arial x X, 由田国田田 +] I| |田 Price Level
(a) Suppose the price level in an economy rises while the money wage rate remains constant. What happens to the quantity of real GDP supplied. How will this affect the aggregate supply or aggregate demand curve? What if the potential GDP increases? Which aggregate curve is affected and how? (b) Real GDP Consumption Planned Investment Government Purchases Net Exports $1,000 $1,000 $100 $150 -$50 2,000 1,900 100 150 -50 3,000 2,800 100 150 -50 4,000 3,700 100 150 -50 From the table data provided, answer the following questions. The numbers in the table are in billions of dollars. Show all calculations. a. What is the equilibrium level of real GDP? b. What is the Marginal Propensity to Consume? c. What is the multiplier value in this economy? d. If potential GDP is $4,000 billion, is the economy at full employment? If not, what is the condition of the economy? e. If the economy is not at full employment, by how much should government spending…
Which of the following would cause the Aggregate Supply curve to move from AS to AS2 in the graph below? A) A general increase in energy and labor cost for businesses. B) A general decrease in labor cost for businesses. C) An increase in productivity. D) A federal government increase in spending.
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When households cut back on their spending, then in the short run we tend to see the price level ______ and equilibrium output __________. fall; fall rise; fall rise; rise fall; rise
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