6. Nonprice-level determinants of aggregate supplyThe following graph shows a decrease in aggregate supply (AS) in a hypothetical economy. Specifically, aggregate supply shifts to the left fromAS₁ to AS₂, causing the quantity of output supplied at a price level of 125 to fall from $250 billion to $150 billion.PRICE LEVEL (CPI)20017515010050250050AS2AS₁100150 200 250300REAL GDP (Billions of dollars)350 400 PRICE LEVEL (CPI125100TH100 1507550250050Determinant250 300 350 400The following table lists several determinants of aggregate supply. Complete the table by indicating the changes in the determinants necessary todecrease aggregate supply.Burdensome RegulationsResource PricesTax Rates200REAL GDP (Billions of dollars)Change Needed to Decrease AS

Aggregate supply means the total quantity of goods and services that all firms in an economy are…

6. Nonprice-level determinants of aggregate supply The following graph shows a decrease in aggregate supply (AS) in a hypothetical economy. Specifically, aggregate supply shifts to the left from AS₁ to AS₂, causing the quantity of output supplied at a price level of 125 to fall from $250 billion to $150 billion. VEL (CPI) 200 175 150 125 AS₂ AS₁

6. Nonprice-level determinants of aggregate supply The following graph shows a decrease in aggregate supply (AS) in a hypothetical economy. Specifically, aggregate supply shifts to the left from AS₁ to AS₂, causing the quantity of output supplied at a price level of 125 to fall from $250 billion to $150 billion. VEL (CPI) 200 175 150 125 AS₂ AS₁

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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33. Refer to Figure 4. As the_____decreases, the amount of ____demanded by all sectors of the economy_____
51) Which of the following both shift aggregate-demand curve to the right? an increase in taxes and at a given price level consumers feel more wealthy a decrease in taxes and at a given price level consumers feel less wealthy an increase in taxes and at a given price level consumers feel less wealthy a decrease in taxes and at a given price level consumers feel more wealthy
6. Why the aggregate supply curve slopes upward in the short run In the short run, the quantity of output that firms supply can deviate from the natural level of output if the actual price level in the economy deviates from the expected price level. Several theories explain how this might happen. For example, the sticky-price theory asserts that the output prices of some goods and services adjust slowly to changes in the price level. Suppose firms announce the prices for their products in advance, based on an expected price level of 100 for the coming year. Many of the firms sell their goods through catalogs and face high costs of reprinting if they change prices. The actual price level turns out to be 90. Faced with high menu costs, the firms that rely on catalog sales choose not to adjust their prices. Sales from catalogs will , and firms that rely on catalogs v will respond by v the quantity of output they supply. If enough firms face high costs of adjusting prices, the unexpected…
3. Explain how each of the following will affect aggregate demand. In each case, draw a diagram to show the effect on the aggregate demand curve. (a) Negative economic indicators cause firms to become pessimistic about the future of the economy. (b) Banks become complacent and begin taking on riskier business loans at lower interest rates. (c) The government passes legislation that increases the rate of corporate taxes. (d) Inflation leads the central bank to increase the base interest rate.
6- How does the aggregate demand curve change if aggregate demand increases in an economy? a) shifts left B) shifts to the right NS) slides down D) constant TO) slides up
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Question 13 (Mandatory) (1 point) Consider the nature of macroeconomic equilibrium. If, at a particular price level, aggregate output demanded is less than that supplied by producers, then O the price level will rise toward its equilibrium value. the aggregate supply curve will shift to the left, re-establishing an equilibrium. the price level will decline toward its equilibrium value. the aggregate demand curve will shift to the right, re-establishing an equilibrium. the aggregate supply curve will shift to the right, re-establishing an equilibrium.
7. Determinants of aggregate supply The following graph shows an increase in short-run aggregate supply (AS) in a hypothetical economy where the currency is the dollar Specifically, the short-run aggregate supply curve shifts to the right from AS, to AS2, causing the quantity of output supplied at a price level of 100 to rise from $200 billion to $250 billion. 200 PRICE LEVEL 175 150 100 76 50 26 O 0 M 400 II 150 200 250 QUANTITY OF OUTPUT AS, Regulations on the firm Human capital Input prices AS 100 350 The following table lists several determinants of short-run aggregate supply. (?) Complete the table by selecting the changes in each scenario necessary to increase short-run aggregate supply. Change Necessary to Increase AS
5. Short-run equilibrium and long-run aggregate supply The following graph shows several aggregate demand and aggregate supply curves for an economy whose potential output is $4 trillion. The curves are labelled a, b, c, and d. Three points on the graph are also indicated by grey stars and labelled X, Y, and Z. 160 150 140 130 120 110 d 100 90 a b 80 + 1 2 3 4 7 8 REAL GDP (Trillions of dollars) PRICE LEVEL
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3. A fall in the price level shifts the aggregate supply curve upward and decreases the quantity of real GDP supplied. Answer: Reason: Page 2 of 5