5. The slope and position of the long-run aggregate supply curve Suppose the Fed doubles the growth rate of the quantity of money in the economy. In the long run, the increase in money growth will change which of the following? Check all that apply. O The size of the labor force O The price level O The quantity of physical capital O The level of technological knowledge Suppose the economy produces real GDP of $50 billion when unemployment is at its natural rate. Use the purple points (diamond symbol) to plot the economy's long-run aggregate supply (LRAS) curve on the graph. ?) 132 128 LRAS 124 120 116 112 108 104 100 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 v, which will: O Not affect the long-run aggregate supply curve O Shift the long-run aggregate supply curve to the right O Shift the long-run aggregate supply curve to the left In the following table, determine how each event affects the position of the long-run aggregate supply (LRAS) curve. Direction of LRAS Curve Shift Many workers leave to pursue more lucrative careers in foreign economies. A scientific breakthrough significantly increases food production per acre of farmland. A government-sponsored training program increases the skill level of the workforce. PRICE LEVEL
5. The slope and position of the long-run aggregate supply curve Suppose the Fed doubles the growth rate of the quantity of money in the economy. In the long run, the increase in money growth will change which of the following? Check all that apply. O The size of the labor force O The price level O The quantity of physical capital O The level of technological knowledge Suppose the economy produces real GDP of $50 billion when unemployment is at its natural rate. Use the purple points (diamond symbol) to plot the economy's long-run aggregate supply (LRAS) curve on the graph. ?) 132 128 LRAS 124 120 116 112 108 104 100 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 v, which will: O Not affect the long-run aggregate supply curve O Shift the long-run aggregate supply curve to the right O Shift the long-run aggregate supply curve to the left In the following table, determine how each event affects the position of the long-run aggregate supply (LRAS) curve. Direction of LRAS Curve Shift Many workers leave to pursue more lucrative careers in foreign economies. A scientific breakthrough significantly increases food production per acre of farmland. A government-sponsored training program increases the skill level of the workforce. PRICE LEVEL
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:5. The slope and position of the long-run aggregate supply curve
Suppose the Fed doubles the growth rate of the quantity of money in the economy. In the long run, the increase in money growth will change which of
the following? Check all that apply.
O The size of the labor force
O The price level
O The quantity of physical capital
O The level of technological knowledge
Suppose the economy produces real GDP of $50 billion when unemployment is at its natural rate.
Use the purple points (diamond symbol) to plot the economy's long-run aggregate supply (LRAS) curve on the graph.
(?)
132
128
LRAS
124
120
116
112
108
104
100
10
20
30
40
60
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 v
which will:
O Not affect the long-run aggregate supply curve
O Shift the long-run aggregate supply curve to the right
O Shift the long-run aggregate supply curve to the left
In the following table, determine how each event affects the position of the long-run aggregate supply (LRAS) curve.
Direction of LRAS Curve Shift
Many workers leave to pursue more lucrative careers in foreign economies.
A scientific breakthrough significantly increases food production per acre of farmland.
A government-sponsored training program increases the skill level of the workforce.
PRICE LEVEL
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