Aggregate price level P₂ P₁ Po Select one: LRAS a. P₁-Po. b. P₂ - P. C. P₂ - Po. d. Y₁ - Yp Yp Y₁ SRAS AD The above graph shows the short run equilibrium. The size of the short run inflationary gap is equal to: Real GDP
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- Por CPI D LRAS, B A H Y₂ Y, Y, SRAS, AD, SRAS, SRAS₂ AD AD, Y or Real GDP Suppose the economy is currently at Point A producing potential output YO. If there is a decrease foreign income, the economy moves to Point, (according to Keynesian model). OA.D; A OB. F. C. O C.B. C O D. H; A in the short-run and to Point in the long-runAggregate demand functionwas Y=3300-3P last year, current year it looks likeY=3390-3P. SRAS curve is horizontal. Potential GDP is $3000 bln and it hasn'tchanged.Find out equilibrium GDP in the short-run and inflation rate in the long-run.Using AD-AS model illustrate the task.Figure 34-3 PRICE LEVEL a a a LRAS Y, Y₂ QUANTITY OF OUTPUT SRAS. SRAS. AD Refer to Figure 34-3. Starting from point B and assuming that aggregate demand is held constant, in the long run the economy is likely to experience a falling price level and a falling level of output, as the economy moves to point C. falling price level and a rising level of output, as the economy moves to point A. rising price level and a falling level of output, as the economy moves to point A. Orising price level and a rising level of output, as the economy moves to point C.
- Figure 6 PRICE LEVEL LRAS Y, Y₂ QUANTITY OF OUTPUT SRAS; SRAS, AD 15. Refer to Figure 6. Starting from point A and assuming that aggregate demand is held constant, in the long run the economy is likely to experience a a. falling price level and a falling level of output, as the economy moves to point C. b. rising price level and a falling level of output, as the economy moves to point B. c. falling price level and a rising level of output, as the economy moves to point B. d. rising price level and a rising level of output, as the economy moves to point C.Price Level Juous 17-18. Long-run AS Y₂Y₁ Short-run AS AD Quantity of Real Output Suppose the economy is operating in a recession such as point B in the graph. If policymakers allow the economy to adjust to the long-run natural level on its own, a. people will raise their price expectations and the short-run aggregate supply will shift left b. people will reduce their price expectations and aggregate demand will shift right c. people will raise their price expectations and aggregate demand will shift left d. people will reduce their price expectations and the short-run aggregate supply will shift rightThe macroeconomy is depicted by the graph to the right 160- a. The current equilibrium price level and output level respectively are: and $ trillion. LRAS (Enter your responses as a whole numbers.) 140- SRAS 120- 100- 80- 60- AD 40- I 10' 12 14 16 18 20 Real GDP ($ trillions) Price level
- 1. Explaining short-run economic fluctuations A majority of economists believe that in the long run, real economic variables and nominal economic variables beha independently of one another. For example, an increase in the money supply, a variable, will cause the price level, a variable, to increase but will have no long-run effect on the quantity of goods and services the economy can produce, a variabl The distinction between real variables and nominal variabl is known as ▼ However, in the short run, most economists believe that re and nominal variables are intertwined. Economists use the model of aggregate demand and aggregate supply to examine the economy's short-run fluctuations around the long-run output level. The following graph shows an incomplete short-run aggregate demand (AD) and aggrega supply (AS) diagram-it needs appropriate labels for the ax and curves. In the questions that follow you will identify so of the missing labels. X AD HORIZONTAL AXIS VERTICAL AXIS The…If a Keynesian model shows that aggregate demand for both goods and labor has shifted to the left, while wages are sticky and remain at the same level and prices remain at the same prices, what will be the result in the labor market? a a shortage of labor b depression c coordinated wage reductions d a surplus of laborThe downward-sloping aggregate demand curve indicates that, ceteris paribus: Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. there is an inverse relationship between demand and the average level of prices. a b a greater quantity of real GDP will be demanded at higher price levels than at lower price levels. C d a decrease in the price level leads to an increase in the quantity demanded of real GDP. inflation and output are directly related.
- The government increase its spending by $100. 1. Explain the effect of this change in government expenditure on AD 2.Explain the effect of this change on the short run equliibrumoutput and inflationOf all the influences on production plans, which influences are constant along the aggregate supply curve? A. All influences except the price level B. The price level if it doesn't change C. Only the price level D. All influences including the price level Thanks!4Consider a baseline long run equilibrium where output is 22 trillion dollars, and the price level is 100. Note: In the Long Run Steady State Equilibrium, Price expectation is the same as price level & unemployment is 5% or lower. None of these are guaranteed in the short run. Usually, short run equilibrium is called an underemployment equilibrium.Starting from the baseline, suppose COVID 19 hits this economy. If this disease only makes workers sick (everything else remaining constant) A Keynesian Macroeconomist proposes the use of a massive expansionary fiscal policy. Step 1) What will be the shape of the Phillips Curve (Upward / Downward/ Vertical/Horizontal). I want you to think about what variable is measured on the horizontal axis of the Phillips Curve Graph and what variable is measured in the Phillips Curve Vertical axis. Then tell us what it means to say that Phillips Curve is upward or downward sloping or vertical or horizontal Step 2) why did this policy create a…