LRASBADYSRAS₁SRASOSRAS2EADY33.In this graph, assume that the economy starts at point A and there is a favorable supply shockthat does not last forever. In this situation, point represents short-run equilibrium and pointrepresents long-run equilibrium.A)B)C)D)BODB; CB; AE;DE; A34. Assume that the economy is at point B. With no further shocks or policy moves, the economy inthe long run will be at point:A)A.B)B.c)C.D)D.Assume that the economy is at point E. With no further shocks or policy moves, the economy inthe long run will be at point:35.A)A.B)B.c)C.D)D.

The supply shock is an unexpected event that changes the overall supply of products. It leads to an…

B LRAS SRAS₁ SRASO SRAS₂ D E AD 33. Y Y In this graph, assume that the economy starts at point A and there is a favorable supply shock that does not last forever. In this situation, point represents short-run equilibrium and point represents long-run equilibrium. A) B; C B) B; A c) E; D D) 34. E; A Assume that the economy is at point B. With no further shocks or policy moves, the economy in the long run will be at point: A) A. B) B. c) C. D) 35. D. Assume that the economy is at point E. With no further shocks or policy moves, the economy in the long run will be at point: A) A. B) B. c) C. D)

B LRAS SRAS₁ SRASO SRAS₂ D E AD 33. Y Y In this graph, assume that the economy starts at point A and there is a favorable supply shock that does not last forever. In this situation, point represents short-run equilibrium and point represents long-run equilibrium. A) B; C B) B; A c) E; D D) 34. E; A Assume that the economy is at point B. With no further shocks or policy moves, the economy in the long run will be at point: A) A. B) B. c) C. D) 35. D. Assume that the economy is at point E. With no further shocks or policy moves, the economy in the long run will be at point: A) A. B) B. c) C. D)

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter24: The Aggregate Demand/aggregate Supply Model

Section: Chapter Questions

Problem 3SCQ: The short run aggregate supply curve was constructed assuming that as the price of outputs...

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Similar questions

In the AD/AS model, what prevents the economy from achieving equilibrium at potential output?
If the economy is operating in the neoclassical zone of the SRAS curve and aggregate demand falls, what is likely to happen to teal GDP?
Explain why the short-run aggregate supply curve might be vertical in the neoclassical zone of the SRAS curve. How might we tell if we are in the neoclassical zone of the AS?
How is recession illustrated in an AD/AS model?
In your view, is the economy currently operating in the Keynesian, intermediate or neoclassical portion of the economys aggregate supply curve?
How is long-term growth illustrated in an AD/AS model?
How is pressure for inflationary price increases shown in an AD/AS model?
Legislation proposes that the government should use macroeconomic policy to achieve an unemployment rate of zero percent, by increasing aggregate demand for as much and as long as necessary to accomplish this goal. From a neoclassical perspective, how bill this policy affect output and the price level in the short nm and in the long run? Sketch an aggregate demand/aggregate supply diagram to illustrate your answer. Hint revisit Figure 26.4.