7. There is little doubt that artificial intelligence and automation have changed the economy. Machines are performing manual tasks at a faster and more consistent pace and are becoming better at replacing humans even in service-oriented jobs such as customer support. Please adjust the graph to illustrate the impact of these innovations on the economy. Assume aggregate demand (AD) is unaffected by these innovations. Aggregate Price Level Aggregate Demand/Aggregate Supply LRAS SRAS X AD Aggregate Output (Q)
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- Determinants of aggregate demand The following graph shows an increase in aggregate demand (AD) in a hypothetical country. Specifically, aggregate demand shifts to the right from AD1AD1 to AD2AD2, causing the quantity of output demanded to rise at all price levels. For example, at a price level of 140, output is now $400 billion, where previously it was $300 billion.Determinants of aggregate demand The following graph shows a decrease in aggregate demand (AD) in a hypothetical country. Specifically, aggregate demand shifts to the left from AD1AD1 to AD2AD2, causing the quantity of output demanded to fall at all price levels. For example, at a price level of 140, output is now $200 billion, where previously it was $300 billion.The following are variables that may cause shifting of aggregate demand (AD) curve. Discuss the effect of increasing these variables to the aggregate demand. Use graphical approach to demonstrate the effect of increasing of each variable and explain why the AD curve shifted. a) Government expenditure (domestic)
- The table below shows aggregate demand and aggregate supply schedules in a hypothetical economy, Acadia. Aggregate Demand and Aggregate Supply Schedules for Acadia Real GDP PADO) (AD1) (ASo) (AS1) Price Level (2012 = 100) (2012 $ billions) 140 150 200 230 280 130 170 220 220 270 120 190 240 190 240 110 210 260 160 210 100 230 280 120 170 a. Draw a graph showing Acadia's ADO, AD1, ASo and AS1. Using the tools given below plot only the endpoints of the demand curves ADo and AD1. Plot all 5 points for each supply curve, ASo and AS1. ces Aggregate Demand and Supply for a hypothetical economy, Acadia 150 Tools 140 ADO AD1 130 120 ASo AS1 110 100 90 100 150 200 250 300 Real GDP (2012 $ billion) Price Level (GDP deflator 2012 = 100)The following graph shows a decrease in aggregate demand (AD) in a hypothetical country. Specifically, aggregate demand shifts to the left from AD1AD1 to AD2AD2, causing the quantity of output demanded to fall at all price levels. For example, at a price level of 140, output is now $200 billion, where previously it was $300 billion. The following table lists several determinants of aggregate demand. Complete the table by indicating the change in each determinant necessary to decrease aggregate demand. Change needed to decrease AD Wealth (increase/ decrease) Taxes (increase/ decrease) Expected rate of return on investment (increase/ decrease) Incomes in other countries (increase/ decrease)On the following graph, use the purple Mine (diamond symbol) plot this economy's long-run aggregate supply (LRAS) curve. Then use the orange ne segments (square symbol) to plat the economy's shart-run aggregate supply (AS) curve at each of the following price levels: 100, 105, 110, 115, and 120, PRICE LEVEL 116 110 105 100 80 75 0 + 10 20 30 40 90 70 OUTPUT (ons of dollars) 85 120 AS LRAS The short-run quantity of output supplied by firms will fall short of the natural level of output when the actual price level level that people expected. the price
- The following graph shows an increase in short-run aggregate supply (SRAS) in a hypothetical economy. Specifically, short-run aggregate supply shifts to the right from SRAS₁ to SRAS2, causing the quantity of output supplied at a price level of 125 to rise from $250 billion to $350 billion. Review the graph and then complete the table that follows. PRICE LEVEL 200 175 150 125 100 75 50 25 0 0 50 SRAS SRAS₂ 100 150 200 250 300 350 400 REAL GDP (Billions of dollars) ? The following table lists several determinants of short-run aggregate supply. Complete the table by indicating the change needed in each determinant to increase short-run aggregate supply. Determinant Change Needed to Increase SRAS Input Prices increase or decrease Burdensome Regulations increase or decrease Technology decline or improvementSuppose that because of globally adverse meteorological conditions, there are serious concerns of climbing prices in an extensive group of commodities. As a result, people now expect an acute increase in the level of input prices. The figure shows aggregate demand (AD), short‑run aggregate supply (SRAS), and long‑run aggregate supply (LRAS). Move one or more of these curves to describe the short‑run effect this would have in the economy and answer the two questions. Adjust graph in picture. In the short run, price level a. increases. b. decreases. c. The change is indeterminate. In the short run, real GDP (or aggregate output) a. The change is indeterminate. b. decreases. c. increases.Economic On April 27, 2023, the U.S. Bureau of Economic Analysis (BEA) released the data on GDP growth for the US economy for the first quarter of 2023 and revealed that the economy grew sluggishly by only 1.1 percent. Based on this report, suppose the U.S. consumers and businesses start to become pessimistic about the direction of the economy and eventually cut consumer and business spending, analyze using the IS-LM and AD-AS frameworks the short and long-run effects of such a shock on prices, output, and real interest rate.
- Suppose that the U.S. concrete industry has developed an inexpensive way to make concrete both lighter and stronger. As a result, the full employment level of aggregate output has grown from level A to level B in the graph. Move the SRAS (short‑run aggregate supply), AD (aggregate demand), or LRAS (long‑run aggregate supply) curves to describe how this concrete technology innovation has affected the U.S. economy. adjust the graph In imageThe following graph shows an aggregate demand (AD) curve and a short-run aggregate supply (SRAS) curve for an economy. Suppose the economy is initially in a short-run equilibrium at PE, and Real GDP is 25trillion. At some point, the economy experiences a decrease in wage rates. Adjust the following graph to show the effect of a decrease in wage rates on the economy. Price Level 0 5 10 I | 1 15 20 25 30 35 Real GDP (Trillions Dollars) SRAS AD 40 45 50 AD SRASSuppose the money market for some hypothetical economy is given by the following graph, which plots the money demand and money supply curves. Assume the central bank in this economy (the Fed) fixes the quantity of money supplied. Suppose the price level decreases from 150 to 125. Shift the appropriate curve on the graph to show the impact of a decrease in the overall price level on the market for money. Money Supply 15 12 4 Money Demand 3 5 10 15 20 MONEY (Billions of dollars) INTEREST RATE (Percent) 18 0 0 25 30 Money Demand Money Supply (?) Following the price level decrease, the quantity of money demanded at the initial interest rate of 9% will be supplied by the Fed at this interest rate. As a result, individuals will attempt to bonds and other interest-bearing assets, and bond issuers will realize that they restored in the money market at an interest rate of than the quantity of money their money holdings. In order to do so, they will interest rates until equilibrium is