6. Critical analysis Q12 Consider an economy with the following aggregate demand (AD) and aggregate supply (AS) schedules. These schedules reflect the fact that, prior to the period we're examining, decision makers entered into contracts and made choices anticipating that the price level would be Pros . AD105 SRAS105 (Trillions of Dollars) Price level (Trillions of Dollars) 5.1 95 3.5 4.9 100 3.8 4.7 105 4.2 4.5 110 4.5 4.3 115 4.8 Why isn't the economy in long-run equilibrium? The actual price level equals the expected price level. The actual price level is different from the expected price level, entailing further adjustments. How will the unemployment rate during the current period compare with this economy's natural rate of unemployment? O Unemployment will be above the natural rate. Unemployment vwill be below the natural rate. Unemployment will be equal the natural rate. What will tend to happen to resource prices in the future? Resource prices will fall, shifting the SRAS curve to the right. Resource prices will rise, shifting the SRAS curve to the left. Resource prices will rise, shifting the SRAS curve to the right. Resource prices will rise, shifting the LRAS curve to the right.
6. Critical analysis Q12 Consider an economy with the following aggregate demand (AD) and aggregate supply (AS) schedules. These schedules reflect the fact that, prior to the period we're examining, decision makers entered into contracts and made choices anticipating that the price level would be Pros . AD105 SRAS105 (Trillions of Dollars) Price level (Trillions of Dollars) 5.1 95 3.5 4.9 100 3.8 4.7 105 4.2 4.5 110 4.5 4.3 115 4.8 Why isn't the economy in long-run equilibrium? The actual price level equals the expected price level. The actual price level is different from the expected price level, entailing further adjustments. How will the unemployment rate during the current period compare with this economy's natural rate of unemployment? O Unemployment will be above the natural rate. Unemployment vwill be below the natural rate. Unemployment will be equal the natural rate. What will tend to happen to resource prices in the future? Resource prices will fall, shifting the SRAS curve to the right. Resource prices will rise, shifting the SRAS curve to the left. Resource prices will rise, shifting the SRAS curve to the right. Resource prices will rise, shifting the LRAS curve to the right.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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I have attached my question as an image - tutors are allowed to answers a maximum of 3 parts - so kindly do not ignore parts A through C.
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Transcribed Image Text:6. Critical analysis Q12
Consider an economy with the following aggregate demand (AD) and aggregate supply (AS) schedules. These schedules reflect the fact that, prior to
the period we're examining, decision makers entered into contracts and made choices anticipating that the price level would be Pros .
AD105
SRAS105
(Trillions of Dollars)
Price level (Trillions of Dollars)
5.1
95
3.5
4.9
100
3.8
4.7
105
4.2
4.5
110
4.5
4.3
115
4.8
Why isn't the economy in long-run equilibrium?
The actual price level equals the expected price level.
The actual price level is different from the expected price level, entailing further adjustments.
How will the unemployment rate during the current period compare with this economy's natural rate of unemployment?
O Unemployment will be above the natural rate.
Unemployment vwill be below the natural rate.
Unemployment will be equal the natural rate.
What will tend to happen to resource prices in the future?
Resource prices will fall, shifting the SRAS curve to the right.
Resource prices will rise, shifting the SRAS curve to the left.
Resource prices will rise, shifting the SRAS curve to the right.
Resource prices will rise, shifting the LRAS curve to the right.
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