Assume the economy operates in the intermediate range of aggregate supply curve. Using the AS/AD model, discus the impact of the following events on the price level and real GDP, and provide relevant figures. a) The recent oil production cut by OPEC and its allies, including Russia, disrupted the global oil market. b) An expansionary monetary policy on which the interest rate is lowered

Q: Following the equation: Y = C + I + G + NX, will the examples given below increase or decrease the…

A: Any change in the behavior or spending by the citizens of a country will have a direct or indirect…

Q: Consider the effects of Corona virus pandemic on the macro economy in Kenya. Suppose we assume that…

A: Large negative aggregate demand shock due to the effects of Corona virus pandemic is causes to a…

Q: Which of the following might be considered a price shock that could shift the AS curve? Multiple…

A: This can be defined as a concept that shows the total demand for the products and the services in a…

Q: Using the “dynamic aggregate demand” and “dynamic aggregate supply” (DAD/DAS) model: (b) draw a…

A: To assess the dynamic changes in output and inflation after various macroeconomic events, a dynamic…

Q: A severe negative supply shock occurs when there is a significant reduction in the supply of key…

A: Supply is the number of goods and services the supplier is willing and able to sell at the market.…

Q: The figure given below represents the equilibrium real GDP and price level in the aggregate demand…

A: In an economy, an intersection of aggregate demand and aggregate supply curve provides economic…

Q: Consider the AD-AS model discussed during the lectures. Assume that the aggregate demand curve is…

A: The macroeconomic model of AD-AS explains how the exogenous events and fluctuations in business…

Q: Consider the AD-AS model discussed during the lectures. Assume that the aggregate demand curve is…

A: 1.a) In macro economics the aggregate demand and supply represents economy as a whole. It considers…

Q: Classify the events according to their impact on aggregate demand (AD). Increase AD Decrease in…

A: a dramatic improvement in stock market, causing investors' wealth to rise causes consumption and…

Q: Assume that a decrease in investment expenditures drives the economy falls below full employment.…

A: In Keynesian economics, the economy is said to be in equilibrium at a point where the aggregate…

Q: Plot an AD/AS diagram from the data above. Identify the equilibrium. Would you expect unemployment…

A: Total demand and total supply in the economy are referred to as aggregate demand and aggregate…

Q: What is the shape of the short run aggregate supply for the Neo Keynesian model used in class?…

A: A contemporary macroeconomic school of thinking that developed from classical Keynesian economics is…

Q: In our Aggregate Demand and Supply model, a decrease in Aggregate Demand would cause which of the…

A: Answer In aggregate demand and supply model, a decrease in aggregate demand would cause deflation…

Q: please graph the following scenerios in the goods and services markets (AD/AS model) and provide an…

A: Aggregate demand: It is the sum total of demand for all the goods and services that are demanded in…

Q: Imagine that in the year 2025, China’s economy increases significantly, causing an increase in…

A: The income of a person and their consumption are directly related. If the income of a person rises,…

Q: Which of the following would properly be classified as an unfavorable supply shock?   a)The interest…

A: A supply shock is an unexpected event that changes the supply of a product or commodity, resulting…

Q: In the AD/AS model, what happens if businesses expect higher future profits while inflationary…

A: The AD/AS (Aggregate Demand/ Aggregate Supply) model is a macroeconomic model. It explains how the…

Q: Which of the following describes the use of Keynesian macroeconomic policy to resolve an…

A: Inflationary gap is the difference between actual real GDP and potential real GDP.

Q: Refer to the Reserve Bank news release below. Use the AD/AS model to answer how each of the economic…

A: Aggregate demand is the total demand for goods and services in an economy. AD=C+I+G+X-M  AS is the…

Q: Refer to the Reserve Bank news release below. Use the AD/AS model to answer how each of the economic…

A: Inflation: It refers to the raise in the prices of goods and services. An increase in inflation will…

Q: In the sticky-price model, if no firms have rexible prices, the short-run aggregate supply schedule…

A: The economy constantly changes when different factors come into play. Aggregate supply and aggregate…

Q: Using the “dynamic aggregate demand” and “dynamic aggregate supply” (DAD/DAS) model:  draw a graph…

A: The DAD-DAS framework, short for Dynamic aggregate Demand- Dynamic aggregate Supply framework, is an…

Q: What could have caused the aggregate demand curve to shift from AD2 to AD1? Increase in net export…

A: The aggregate demand curve depicts the total quantity of goods and services demanded at each…

Q: Consider the AD-AS model discussed during the lectures. Assume that the aggregate demand curve is…

A: Fiscal Policy is defined as a policy which emphasizes on the use of government spending or implement…

Q: Please Draw A Graph. In 2007, potential GDP approximately equal actual real GDP. Represent this…

A: According to the quantity theory of money, an increase in the money supply causes an equivalent…

Q: Which of the following would be positive aggregate demand shock? A) a slower money growth B)…

A: The correct option is C.

Q: Consider the AD-AS model. Assume the aggregate demand curve is given by Y= 8-0.5n, that the long run…

A: Economics is a social science that studies how people behave when they have infinite demands and…

Q: Consider the original AD/AS model in steady state. If the central bank fights against inflation more…

A: As the central bank fights against inflation which consists of full credibility any announcement by…

Q: For each of the following Aggregate Supply Models, show that Y = Y +a (P - P), stating clearly all…

A: The three models of aggregate supply are discussed as follows:

Q: As a result of a positive supply shock, price level goes down. Use both AD-AS and MD-MS diagrams to…

A: A macroeconomic model known as the AS-AD model illustrates how changes in aggregate supply (AS) and…

Q: Use a standard dynamic AS-AD model to explain how the macroeconomy adjusts following a favourable…

A: Aggregate demand is the addition of demand at a prevailing market price of all individuals,…

Q: Suppose an economy experiences a period of high growth and low unemployment. Eventually output…

A: High growth and low unemployment occurs when aggregate demand increases, shifting AD curve to right,…

Q: Fill in the missing values in the table by selecting the change in each scenario required to…

A: Aggregate demand refers to the total level of spending on goods and services within an economy…

Q: Canada is an open economy that is currently in a recessionary output gap. (a) Draw a correctly…

A: When the actual degree of economic output is lower than the economy's potential output, it creates a…

Q: Use the AS-AD model to explain how Canada's declining business confidence can change the…

A: Macroeconomics examines the working, composition, and dynamics of an economy. AD/AS model is used…

Q: Q.1.1 An increase in the price of oil is an example of a negative supply shock. Use the AD-AS model…

A: Given: An increase in the price of oil is an example of a negative supply shock.

Q: Philotechnia requires every high school graduate to be computer literate because so many workplaces…

A: The policy of computer literacy increases the labor supply and thereby the potential GDP and…

Q: During the Covid pandemic the Federal Government sent several checks to individuals and families.…

A: A macroeconomic framework for evaluating an economy's overall performance is the aggregate supply…

Q: Please see below. These are true or false questions. 1). The aggregate supply curve will shift left…

A: Aggregate supply curve show the total quantity of output that firm will produce.