Algonquin's equilibrium price level and real output? The initial equilibrium price level and real output are and $ billion. b. If the unemployment rate is 3 percent and inflation is low, is an expansionary or contractionary fiscal policy needed? If Algonquin's government changes taxes by $60 billion, should taxes increase or decrease? By how much will the aggregate demand curve shift? policy is needed. If Algonquin's government changes billion. Round your intermediate answers to one decimal c. Fill in the Real GDP AD₁ column in the above table and, on your graph, show the shift in aggregate demand to AD₁. What are Algonquin's new equilibrium price level and real output? Is the final change in output greater or less than the shift in the aggregate demand curve? Plot only the endpoints of the aggregate demand curve (AD₂). The new price level and real output are [ and $ The change in output is Click to select) than the shift in the AD curve. If the unemployment rate is 3 percent and inflation is low. [Click to select) taxes by $60 billion, these taxes should [Click to select) The change in taxes will shift the aggregate demand curve by $[ place and your final answer to the nearest whole number. billion.

Algonquin's equilibrium price level and real output? The initial equilibrium price level and real output are and $ billion. b. If the unemployment rate is 3 percent and inflation is low, is an expansionary or contractionary fiscal policy needed? If Algonquin's government changes taxes by $60 billion, should taxes increase or decrease? By how much will the aggregate demand curve shift? policy is needed. If Algonquin's government changes billion. Round your intermediate answers to one decimal c. Fill in the Real GDP AD₁ column in the above table and, on your graph, show the shift in aggregate demand to AD₁. What are Algonquin's new equilibrium price level and real output? Is the final change in output greater or less than the shift in the aggregate demand curve? Plot only the endpoints of the aggregate demand curve (AD₂). The new price level and real output are [ and $ The change in output is Click to select) than the shift in the AD curve. If the unemployment rate is 3 percent and inflation is low. [Click to select) taxes by $60 billion, these taxes should [Click to select) The change in taxes will shift the aggregate demand curve by $[ place and your final answer to the nearest whole number. billion.

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Concept explainers

Comparative Advantage and Absolute Advantage Analysis

The theory of absolute advantage was given by Adam Smith in the year 1776.

Question

The table below shows aggregate demand and aggregate supply schedules in a hypothetical economy. Algonquin, whose MPC is
equal to 0.33 and whose natural unemployment rate is estimated to be 4.5 percent.
Price Level
(2012= 100)
120
110
100
90
se
Price Level (2012= 100)
a. Draw a graph showing Algonquin's aggregate demand curve, ADO, and its aggregate supply curve, AS. Plot all five points of the
aggregate demand curve and aggregate supply curve..
160
140
120
100
80
60
40
20
Real GOP AD (2012 S
billions)
60
75
90
105
120
0
Real GOP AD₁ (2012's billions) Real GDP AS (2012 $ billions)
110
105
90
15
20 40 60 80 100 120 140 160 180 200
Real GDP (2012 $ billions)
Tools
AD₂
AS
AD₁
0

What is Algonquin's equilibrium price level and real output?
The initial equilibrium price level and real output are
billion.
b. If the unemployment rate is 3 percent and inflation is low, is an expansionary or contractionary fiscal policy needed? If Algonquin's
government changes taxes by $60 billion, should taxes increase or decrease? By how much will the aggregate demand curve shift?
policy is needed. If Algonquin's government changes
billion. Round your intermediate answers to one decimal
and $
If the unemployment rate is 3 percent and inflation is low. Click to select)
taxes by $60 billion, these taxes should (Click to select)
The change in taxes will shift the aggregate demand curve by $[
place and your final answer to the nearest whole number.
c. Fill in the Real GDP AD₁ column in the above table and, on your graph, show the shift in aggregate demand to AD₁. What are
Algonquin's new equilibrium price level and real output? Is the final change in output greater or less than the shift in the aggregate
demand curve? Plot only the endpoints of the aggregate demand curve (AD₂).
The new price level and real output are
and $
The change in output is [(Click to select) than the shift in the AD curve.
billion.

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