6.Suppose political turmoil causes a significant decrease in oil production in themiddle east. How will real GDP, employment, and the general price level be affectedin the short run?7.How will the event described in question 6 affect real GDP, employment, and thegeneral price level in the long run? Explain in words and a graph.

In the middle East economy, it is given that the production of oil decreases due to political…

Answered: 6. Suppose political turmoil causes a…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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11- In the long run, a decrease in government purchases of military equipment would cause aggregate price level to … and the aggregate output to…. A- fall, stay constant B- fall, fall C- stay constant, fall D- stay constant, rise
Identify the word, concept, or expression most closely related to the word, concept, or expression below: 1. Short-run effect of an increased number of Canadians vacationing and shopping at home. Choose one of the following: product prices fall and output rises, product prices fall and output falls, product prices rise and output falls, product prices rise and output rises, prices remain unchanged and output rises, product rises and output remains unchanged 2. Short-run effect of increased government spending on infrastructure. Choose one of the following: product prices fall and output rises, product prices fall and output falls, product prices rise and output falls, product prices rise and output rises, prices remain unchanged and output rises, product rises and output remains unchanged 3. Short-run effect of a large increase in commodity (input) prices for businesses. Choose one of the following: product prices fall and output rises, product prices fall and output falls, product…
5. Statistics show that from 2017 to 2018, unemployment decreased while inflation also decreased. Which of the following is a valid reason behind these changes? Aggregate supply curve shifted to the right, which caused the price level to decrease and national output to increase Aggregate supply curve shifted to the left, which caused the price level to increase and national output to decrease Aggregate demand curve shifted to the right, which caused the price level and national output to increase Aggregate demand curve shifted to the left, which caused the price level and national output to decrease
5. Macroeconomic equilibrium and the ranges of the aggregate supply curve The following graph shows the aggregate demand (AD₁) and aggregate supply (AS) curves for a hypothetical economy with full-employment output. of $11 trillion. PRICE LEVEL (CPI) 130 125- 120 115 110 105 100 95 90 + 8.0 8.5 AD₁ AS 9.0 10.5 9.5 10,0 REAL GDP (Trillions of dollars) 11.0 11.5 12.0 AD₂ Macro Eq 2 Suppose the level of real GDP supplied by firms is $10.5 trillion and the price level is 105. In this case, the quantity of real GDP supplied is the real GDP demanded at a price level of 105, and firms will experience an unplanned respond to the change in inventories by producing GDP of in inventories. Firms will output until the economy reaches macroeconomic equilibrium at a price level of and real The decrease in aggregate demand leads to a movement along the price level to Suppose consumers and businesses become less optimistic about future economic conditions, causing the aggregate demand curve to decrease…
8. Which of the following explain why the Aggregate Demand curve is downward sloping? a) An increase in the price level decreases the purchasing power of money denominated wealth, which in turn causes a decline in on consumption spending. b) An increase in the price level decreases the purchasing power of money, which means that more money is needed to purchase goods. This causes buyers of investment and durable goods to require bigger loans to finance their purchases. This, in turn, causes an increase in the demand for loanable funds which leads to a higher interest rate. A higher interest rate will reduce the real purchases of investment and durable goods. c) An increase in the price level makes goods relatively more expensive to foreigners causing them to buy less which means that net exports will decline. d) All of the above. e) None of the above. 9. Which of the following explain why the Aggregate Supply curve is upward sloping?…
Explain about the following graphs:
6. Why the aggregate supply curve slopes upward in the short run In the short run, the quantity of output supplied by firms can deviate from the natural level of output if the actual price level deviates from the expected price level in the economy. A number of theories explain reasons why 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 will respond by the quantity of output they supply. If enough firms face high costs of adjusting prices, the…
What is the relationship between the price level and the following components of aggregate demand? a. There is (a negative/ no / a positive) relationship between the price level and consumption. b. There is (a negative/no/ a positive) relationship between the price level and investment. c. There is (a negative/no/ a positive) relationship between the price level and government spending. d. There is (a negative/no/ a positive) relationship between the price level and net exports.
11. Recession True or False: The aggregate-demand curve slopes downward because it is the horizontal sum of the demand curves for individual goods. True False
1. What is the difference between the long-term aggregate supply and the short term supply? (also diagrammatically) 2. New Supply - how do we measure it? How can we calculate it (example/ exercise)?
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 v , and firms that rely on catalogs will respond by v the quantity of output they supply. If enough firms face high costs of adjusting prices, the unexpected…
3. Because of the slope of the aggregate demand curve, we can say that A) a decrease in the price level leads to a lower level of real GDP demanded. B) an increase in the price level leads to no change in the level of real GDP demanded. C) a decrease in the price level leads to a higher level of real GDP demanded. D) an increase in the price level leads to a higher level of real GDP demanded. 4. Which of the following best describes the "wealth effect"? A) When the price level falls, the real value of household wealth falls. B) When the price level falls, the nominal value of household wealth falls. C) When the price level falls, the nominal value of household wealth rises. D) When the price level falls, the real value of household wealth rises.

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