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130 PRICE LEVEL 125 120 115 110 105 100 95 99 80 90 The Simple Keynesian Model AD 1 ? 8.0 8.5 9.0 AS AD2 11.0 11.5 12.0 9.5 10.0 10.5 REAL GDP (Trillions of dollars) + New Eq Suppose consumers and businesses become more optimistic about future economic conditions, causing aggregate demand to increase by a total $0.5 trillion at each price level (after all multiplier effects have taken place). On the previous graph, use the green line (triangle symbol) to show the new aggregate demand curve (AD2). Be sure that AD2 is parallel to AD1 (you can mouse over AD₁ to see its slope). Then use the black drop lines (cross symbol) to indicate the new macroeconomic equilibrium after the shift of aggreg remain the same The increasincrease demand leads to a movement along the horizontal vertical level to decrease, and the equilibrium level of Real GDP to increase range decrease the aggregate supply curve, causing the equilibrium price remain the same Attempts Average / 2 5. The aggregate supply curve in the simple Keynesian model Complete the following statement to make it true. "In the AD-AS framework, the simple Keynesian model includes an aggregate supply curve that Natural Real GDP." until the economy reaches its slopes upward Under what condition will an increase in total spending lead to an equivalent increase in Real GD O When the economy is producing more than Natural Real GDP. O When the economy is producing at Natural Real GDP. O When the economy is producing less than Natural Real GDP. O When the aggregate supply curve is vertical. is horizontal is vertical

130 PRICE LEVEL 125 120 115 110 105 100 95 99 80 90 The Simple Keynesian Model AD 1 ? 8.0 8.5 9.0 AS AD2 11.0 11.5 12.0 9.5 10.0 10.5 REAL GDP (Trillions of dollars) + New Eq Suppose consumers and businesses become more optimistic about future economic conditions, causing aggregate demand to increase by a total $0.5 trillion at each price level (after all multiplier effects have taken place). On the previous graph, use the green line (triangle symbol) to show the new aggregate demand curve (AD2). Be sure that AD2 is parallel to AD1 (you can mouse over AD₁ to see its slope). Then use the black drop lines (cross symbol) to indicate the new macroeconomic equilibrium after the shift of aggreg remain the same The increasincrease demand leads to a movement along the horizontal vertical level to decrease, and the equilibrium level of Real GDP to increase range decrease the aggregate supply curve, causing the equilibrium price remain the same Attempts Average / 2 5. The aggregate supply curve in the simple Keynesian model Complete the following statement to make it true. "In the AD-AS framework, the simple Keynesian model includes an aggregate supply curve that Natural Real GDP." until the economy reaches its slopes upward Under what condition will an increase in total spending lead to an equivalent increase in Real GD O When the economy is producing more than Natural Real GDP. O When the economy is producing at Natural Real GDP. O When the economy is producing less than Natural Real GDP. O When the aggregate supply curve is vertical. is horizontal is vertical

MACROECONOMICS
MACROECONOMICS
14th Edition
ISBN:9781337794985
Author:Baumol
Publisher:Baumol
Chapter11: Managing Aggregate Demand: Fiscal Policy
Section: Chapter Questions
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130 PRICE LEVEL 125 120 115 110 105 100 95 99 80 90 The Simple Keynesian Model AD 1 ? 8.0 8.5 9.0 AS AD2 11.0 11.5 12.0 9.5 10.0 10.5 REAL GDP (Trillions of dollars) + New Eq Suppose consumers and businesses become more optimistic about future economic conditions, causing aggregate demand to increase by a total $0.5 trillion at each price level (after all multiplier effects have taken place). On the previous graph, use the green line (triangle symbol) to show the new aggregate demand curve (AD2). Be sure that AD2 is parallel to AD1 (you can mouse over AD₁ to see its slope). Then use the black drop lines (cross symbol) to indicate the new macroeconomic equilibrium after the shift of aggreg remain the same The increasincrease demand leads to a movement along the horizontal vertical level to decrease, and the equilibrium level of Real GDP to increase range decrease the aggregate supply curve, causing the equilibrium price remain the same
Transcribed Image Text:130 PRICE LEVEL 125 120 115 110 105 100 95 99 80 90 The Simple Keynesian Model AD 1 ? 8.0 8.5 9.0 AS AD2 11.0 11.5 12.0 9.5 10.0 10.5 REAL GDP (Trillions of dollars) + New Eq Suppose consumers and businesses become more optimistic about future economic conditions, causing aggregate demand to increase by a total $0.5 trillion at each price level (after all multiplier effects have taken place). On the previous graph, use the green line (triangle symbol) to show the new aggregate demand curve (AD2). Be sure that AD2 is parallel to AD1 (you can mouse over AD₁ to see its slope). Then use the black drop lines (cross symbol) to indicate the new macroeconomic equilibrium after the shift of aggreg remain the same The increasincrease demand leads to a movement along the horizontal vertical level to decrease, and the equilibrium level of Real GDP to increase range decrease the aggregate supply curve, causing the equilibrium price remain the same
Attempts Average / 2 5. The aggregate supply curve in the simple Keynesian model Complete the following statement to make it true. "In the AD-AS framework, the simple Keynesian model includes an aggregate supply curve that Natural Real GDP." until the economy reaches its slopes upward Under what condition will an increase in total spending lead to an equivalent increase in Real GD O When the economy is producing more than Natural Real GDP. O When the economy is producing at Natural Real GDP. O When the economy is producing less than Natural Real GDP. O When the aggregate supply curve is vertical. is horizontal is vertical
Transcribed Image Text:Attempts Average / 2 5. The aggregate supply curve in the simple Keynesian model Complete the following statement to make it true. "In the AD-AS framework, the simple Keynesian model includes an aggregate supply curve that Natural Real GDP." until the economy reaches its slopes upward Under what condition will an increase in total spending lead to an equivalent increase in Real GD O When the economy is producing more than Natural Real GDP. O When the economy is producing at Natural Real GDP. O When the economy is producing less than Natural Real GDP. O When the aggregate supply curve is vertical. is horizontal is vertical
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