Aggregate Demand and Aggregate Supply - End of Chapter Problems 10. There were two major shocks to the U.S. economy in 2007, leading to the severe recession of 2007-2009. One shock was related to oil prices; the other was the slump in the housing market. In the accompanying graph, shift the AD and/or SRAS curves and move the equilibrium point to its new position to show the effects of the following two shocks on GDP in the AD-AS framework. a. Data taken from the Department of Energy indicate that the average price of crude oil in the world increased from $54.63 per barrel on Jan. 5, 2007, to $92.93 on Dec. 28, 2007. b. The Housing Price Index, published by the Office of Federal Housing Enterprise Oversight, calculates that U.S. home prices fell by an average of 3% in the 12 months between January 2007 and January 2008. c. As a result of the two shocks, real GDP decreased price level increased , whereas the aggregate Aggregate price level Incorrect E Real GDP SRAS AL

Aggregate Demand and Aggregate Supply - End of Chapter Problems 10. There were two major shocks to the U.S. economy in 2007, leading to the severe recession of 2007-2009. One shock was related to oil prices; the other was the slump in the housing market. In the accompanying graph, shift the AD and/or SRAS curves and move the equilibrium point to its new position to show the effects of the following two shocks on GDP in the AD-AS framework. a. Data taken from the Department of Energy indicate that the average price of crude oil in the world increased from $54.63 per barrel on Jan. 5, 2007, to $92.93 on Dec. 28, 2007. b. The Housing Price Index, published by the Office of Federal Housing Enterprise Oversight, calculates that U.S. home prices fell by an average of 3% in the 12 months between January 2007 and January 2008. c. As a result of the two shocks, real GDP decreased price level increased , whereas the aggregate Aggregate price level Incorrect E Real GDP SRAS AL

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

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Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Aggregate Demand and Aggregate Supply - End of
Chapter Problems
10. There were two major shocks to the U.S. economy in
2007, leading to the severe recession of 2007-2009. One
shock was related to oil prices; the other was the slump in
the housing market. In the accompanying graph, shift the
AD and/or SRAS curves and move the equilibrium point to
its new position to show the effects of the following two
shocks on GDP in the AD-AS framework.
a. Data taken from the Department of Energy indicate that
the average price of crude oil in the world increased from
$54.63 per barrel on Jan. 5, 2007, to $92.93 on Dec. 28,
2007.
b. The Housing Price Index, published by the Office of
Federal Housing Enterprise Oversight, calculates that U.S.
home prices fell by an average of 3% in the 12 months
between January 2007 and January 2008.
c. As a result of the two shocks, real GDP
decreased
price level
increased
, whereas the aggregate
Aggregate price level
Incorrect
E
[1]
Real GDP
SRAS
AD

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Market Watch, May 24, 2018 discusses, "what happens if the oil rally turns into an 'oil shock' ". Graphically show the short- and long-term impact of this using the AD-AS model.
Need help with this. Please show how to adjust the AS and AD lines. Thanks!
In 2019, before the Covid-19 pandemic began affecting the U.S. economy, Nouriel Roubini of New York University identified "three negative supply shocks that could trigger a global recession by 2020." What is a negative supply shock? OA. Any event that causes consumers to unexpectedly increase their consumption, shifting aggregate supply to the left OB. An event that causes an unexpected change in production costs or technology, shifting short-run aggregate supply to the left OC. An event that causes an unexpected change in production costs or technology, shifting long-run aggregate supply to the left OD. Any event that causes firms to sell more goods than they can produce, shifting aggregate supply to the left
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Use the following information to answer questions 8 through 11: The graph below shows the AD-AS diagram for Spain. Suppose that the economy experiences a negative aggregate demand shock denoted by the move from AD1 to AD2. Note that the new curve is shown in gray. 1200+ 1100 ALN 1000+ 900 Al 800 - 700- 600 500 400 - 309AS 200 100+ LRAS 200 Real GDP 300. 400 100 500 600 700 800 900 1000 1100 120 8. What has happened to the cyclical unemployment in Spain (select one)? a. Cyclical unemployment remains the same. b. Cyclical unemployment decreased. c. Cyclical unemployment increased. Price Level
Use the graph below to answer questions #4-5. This graph depicts the AD-AS model, which involves the Aggregate Demand curve (AD), Aggregate Supply curve (AS) and Long Run Aggregate Supply curve (LRAS). Our assumptions with this model match those from class. LRAS AS AD Assume in the multiple choice questions below that our starting point is pt A. Assume that in the months leading up to a major election, the Federal government enacts legislation that significantly increases government spending. Assume further that government pays for this spending by increasing the money supply. Based on our discussion of the self-correcting mechanism, how would this policy affect the graph in the short run and long run? Itranscript Oa. in the short run, AD will increase, but over the long run, AS will eventually shift upward as workers begin to ask for cost of living increases from their employers Ob. in the short run, AD will increase, but over the long run. AS will eventually shift leftward as workers…
Use the following graph to answer the questions that follow. The graph depicts an economy where aggregate demand has decreased. Note that long-run aggregate supply remains changed. Price level a LRAS AD₂ AD₂ The graph shows a decrease in the price level due to a decrease in aggregate demand. Real gross domestic product (GDP), however, does not change. If this were an accurate description of how an economy responds during a recession, which of the following would be an appropriate government response to a decrease in aggregate demand? Real GDP the government should make an effort to control prices and limit inflation. The government should attempt to stimulate short-run aggregate supply. 0 The government should take active steps to promote full employment. The government should let the economy adjust to full employment on its own. Ô The government should restrict international trade and immigration. Address