Q: Aggregate demand will shift to the right if one or more of its the components increases spending…
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A: A fall in the price of oil leads to a fall in the cost of production for the producers in an…
Q: O a. False O b. True
A: TRUE Aggregate Demand and GDP both represent a nation's aggregate output. GDP is the total value of…
Q: If house holds decide to save a larger portion of thier income, what effect would this have on the…
A: The recompense that a factor of production receives for his services is referred to as income. Rent,…
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A: Money Supply refers to the total amount of monetary assets available in an economy at a specific…
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Q: Which one of the following events would most likely precede a fall in aggregate output? Inventory…
A: The events which would precede the fall in aggregate output would be any factor or variable which…
Q: Hand written solutions are strictly prohibited
A: The objective of the question is to identify the most likely cause of a rightward shift in the…
Q: Which of the following is true? O Potential GDP is determined by the available supply of labor,…
A: Potential GDP or potential output, refers to the level of production that an economy can sustainably…
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A: Option (d).
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Q: Z AD AD₁ QUANTITY OF OUTPUT Refer to Figure 34-5. Suppose the economy starts at Y. If there is a…
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A: Aggregate demand shows the total demand for final goods and services produced in an economy during a…
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A: Disclaimer : “Since you have asked multiple question, we will solve the first question for you. If…
Q: Suppose the central bank decides to increase money supply (M) in an economy during "normal" times…
A: A monetary injection in an open economy causes a rightward shift of the aggregate-demand curve…
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A: The quantity theory of money:The quantity theory of money equation can be written as follows:
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A:
Q: With an increase in the capital stock, the short-run aggregate supply curve Select one: Oa. remains…
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Q: Using the graph, illustrate the long-run impact of the sharp increase in saving by shifting both the…
A: The AD-AS model combines and brings together the aggregate demand and supply curves to better…
Q: O Figure 13-3 shows the relationship between real GDP and the price level in an economy. In the…
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Q: Look at Figure 2. Assume this aggregate demand diagram represents an economy with government, where:…
A: The given model depicts a situation of a closed economy. AD=C+I+G AD function is the sum of…
Q: 10. Which of the following are reasons why the short-run Aggregate Supply curve shown in the…
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Q: Why is the aggregate demand curve downsloping? Mention three ways of explanations to answer this.…
A: The aggregate demand curve is a locus of the combinations of the price levels and the quantities…
Q: 1. Aggregate supply definitions The short-run aggregate supply curve shows: O What happens to the…
A: The supply shows the relationship between Price and the quantity supplied which is a direct and…
Q: Price Level * B Quantity of Output Price Level O O a. It would move the economy from A to B. O b. It…
A: The aggregate demand represents the total demand for all goods and services produced in an economy…
Q: Consider the graph at right showing the long-run aggregate supply (LAS) and the aggregate demand…
A: The objective of the question is to determine the impact on the equilibrium price level and real GDP…
Q: Which of the following is true? OA. Potential GDP decreases as the price level increases. OB. The…
A: Potential GDP:The maximum sustainable level of output an economy can produce over the long term when…
Q: Which of the following will cause an increase in aggregate demand? OA. An increase in the reserve…
A: Aggregate demand (AD): - It is the total demand of goods and services in an economy at a particular…
Q: Suppose the economy is operating at potential GDP. Then the federal government decides to implement…
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Q: explain the likely effects of U.S boom on the demand for canadian exports.what woukd be the effect…
A: Depreciation/devaluation -: It refers to fall in value of exchange rate – exchange rate becomes…
Q: A vertical long-run aggregate supply curve indicates that O policies that shift the aggregate demand…
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- Think of the AD-AS model with an upward-sloping AS curve. Suppose the economy is initially at its long-run equilibrium. What is the impact of an unexpected increase in money supply in the short run and in the long run? O a. In the short run, output rises above its natural level. In the long run, output returns to its natural level and the price level is higher than what it was initially. O b. In the short run, output falls below its natural level. In the long run, output returns to its natural level and the price level is higher than what it was initially. O c. In the short run, output rises above its natural level. In the long run, output returns to its natural level and the price level is lower than what it was initially. O d. In the short run, output falls below its natural level. In the long run, output returns to its natural level and the price level is lower than what it was initially.Hand written solutions are strictly prohibitedWhy is the aggregate demand curve downsloping? Specify how your explanation differs from the explanation for the downsloping demand curve for a single product. What role does the multiplier play in shifts of the aggregate demand curve?
- How do fluctuations in aggregate demand and short-run aggregate supply bring fluctuations in real GDP around potential GDP? Starting from a full-employment equilibrium, a decrease in aggregate demand and creates gap. O A. increases real GDP above potential GDP; an inflationary OB. decreases real GDP below potential GDP; an inflationary OC. increases real GDP above potential; a recessionary O D. decreases real GDP below potential GDP; a recessionary _, short-run aggregate , and the economy returns to a full-employment In the long run, the money wage rate supply equilibrium. O A. rises; increases B. falls; decreases C. rises; decreases D. falls; increasesA country's economy is close to full employment. The government then decides to launch a tax cut program. Simultaneously, the central bank launches a bond sale program of the same magnitude. What can we say about the country's aggregate product (Y), price level (P) and interest rate (i) in the short run? We can expect Y to increase, P to increase, and i to increase. O b. We can expect Y to remain unchanged, P to remain unchanged, and i to increase. O c. We can expect Y to remain unchanged, P to remain unchanged, and i to remain unchanged. Od. We can expect Y to decrease, P to decrease, and i to decrease. Oe. None of the alternatives is correct.A Moving to another question will save this response. Question 21 An increase in wealth from a substantial increase in stock prices will move the economy along a fixed aggregate demand curve. O A. true. O B. false. A Moving to another question will save this response.
- In the AS/AD Model, a decrease in the financial friction will Select one: O a. Shift the aggregate demand curve to the right. Ob. O b. Shift the aggregate supply curve to the left. Shift the aggregate supply curve to the right. O c. O d. Shift the aggregate demand curve to the left.Answer it correctly please. I ll rate accordingly.How would I do c and d?
- Explain the effect, if any, that each of the following occurrencesshould have on the aggregate demand curve.a. The Fed lowers the discount rate.b. The price level decreases.c. The federal government increases federal income tax rates inan effort to reduce the federal deficit.d. Pessimistic firms decrease investment spending.e. The inflation rate falls by 3 percent.f. The federal government increases purchases to stimulatethe economy.Question 1 Which of the following is not a reason for the downward slope of the aggregate demand curve? O a. Interest-rate effect O b. Net exports effect O c. Government spending effect O d. Real balances effectAssume the economy is initially in equilibrium with desired aggregate expenditure equal to real GDP at point W. The price level is Po. Now, suppose there is an exogenous fall in the price level to P2. Which of the following statements describes the likely macroeconomic effects? O A. The AE curve shifts to AE₁, a new equilibrium is established at point V, and the AD curve shifts from AD to AD¹, and equilibrium moves from point B to point D. OB. The AE curve shifts to AE2, a new equilibrium is established at point U, and the AD curve shifts from AD to AD¹, and equilibrium from point B to point D. Ⓒ C. The AE curve shifts to AE2, a new equilibrium is established at point U, and the economy moves from point B to point C along AD. O D. The AE curve shifts to AE₁, new equilibrium is established at point V, and the economy moves from point B to point C along AD⁰. Desired Aggregate Expenditure Price Level 759² Y₁ W Yo Y₂ Real GDP AE=Y AE₂ Real GDP AEo AE₁ Q ✔ Q