ADVANCED ANALYSIS Suppose that the equation for a particular short-run AS curve is P= 30 + 0.5Q, where Pis the price level and Q is real output in dollar terms. Instructions: Enter your answers as a whole number. a. What is Q if the price level is 130? b. Suppose that the Qin your answer is the full-employment level of output. By how much will Q increase in the short run if the price level unexpectedly rises from 130 to 144? By how much will Qincrease in the long run due to the price-level increase?

ADVANCED ANALYSIS Suppose that the equation for a particular short-run AS curve is P= 30 + 0.5Q, where Pis the price level and Q is real output in dollar terms. Instructions: Enter your answers as a whole number. a. What is Q if the price level is 130? b. Suppose that the Qin your answer is the full-employment level of output. By how much will Q increase in the short run if the price level unexpectedly rises from 130 to 144? By how much will Qincrease in the long run due to the price-level increase?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Use the figure to answer the following questions. Assume that the economy initially is operating at price level 120 and real output level $870. This output level is the economy's potential (full-employment) level of output. Next, suppose that the price level rises from 120 to 130. 160 AS, AS, 150 AS, 140 130 120 110 100 90 810 830 850 870 890 910 930 950 Real output (dollars) Activate Wi Price level
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5. Consider the following changes in the sticky-wage model. a. Suppose labor contracts are fully indexed for inflation so that as inflation changes. That is, the nominal wage is to be adjusted to fully compensate for changes in the consumer price index. How does full indexation alter the AS curve in this model? b. Suppose that now indexation is only partial. That is, for every increase in the CPI, the nominal wage rises, but by a smaller percentage. How does partial indexation alter the AS curve in this model?
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