a. What are the short-run equilibrium real GDP and price level in 2019? b. What is the long-run equilibrium real GDP? c. Is the short-run macroeconomic equilibrium a full-employment equilibrium, below full-employment equilibrium, or above full-employment equilibrium? d. In transition to the long run, how would the wages in this economy change? e. Following from d, explain how would the short run supply curve move to its long run position, as the changes in the nominal wages take effect. f. What will the long run price level be?
a. What are the short-run equilibrium real GDP and price level in 2019? b. What is the long-run equilibrium real GDP? c. Is the short-run macroeconomic equilibrium a full-employment equilibrium, below full-employment equilibrium, or above full-employment equilibrium? d. In transition to the long run, how would the wages in this economy change? e. Following from d, explain how would the short run supply curve move to its long run position, as the changes in the nominal wages take effect. f. What will the long run price level be?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
a. What are the short-run equilibrium real
b. What is the long-run equilibrium real GDP?
c. Is the short-run
full-employment equilibrium, or above full-employment equilibrium?
d. In transition to the long run, how would the wages in this economy change?
e. Following from d, explain how would the short run supply curve move to its long run
position, as the changes in the nominal wages take effect.
f. What will the long run price level be?
Transcribed Image Text:Question 1:
Price level
110
120
130
140
150
160
Homework 4
Aggregate Demand Aggregate Supply Model
Aggregate Demand
(billions of 2019
dollars)
500
450
400
350
300
250
Short Run Aggregate
Supply
200
300
400
500
600
700
Long Run Aggregate
Supply
350
350
350
350
350
350
The table above shows aggregate demand and short run aggregate supply schedules for the
country of Happydays. Potential GDP of this economy is $350 billion.
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