Consider the graph at right showing the long-run aggregate supply (LAS) and theaggregate demand (AD) curves.Suppose the long-run aggregate supply curve shifts to a real GDP level of $75.O A. The equilibrium price level will fall, and equilibrium real GDP willdecrease.B. The equilibrium price level will fall, and equilibrium real GDP will increase.C. The equilibrium price level will rise, and equilibrium real GDP willincrease.OD. The equilibrium price level will rise, and equilibrium real GDP willdecrease.-----Price levelPoLRASAD01020 3040 50Real GDP6070 8090 100

The objective of the question is to determine the impact on the equilibrium price level and real GDP…

Answered: Consider the graph at right showing the…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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A decrease in the price of foreign oil will affect the U.S. economy by O a. decreasing aggregate supply. O b. increasing aggregate demand. O c. increasing aggregate supply. O d. decreasing aggregate demand
Price level (GDP price index, 2012 = 100) Potential Potential GDP, AS, GDP2 AS2 Real GDP (trillions of 2012 dollars)
4
How would I do c and d?
In the figure, as the price level increases the aggregate demand curve will Price level (GDP price index, 2012 = 100) A. not shift. O B. not shift, but the aggregate demand curve will change so that it is positively sloped. O C. shift from AD, to AD, O D. shift from AD, to AD, and then back to AD,. E. shift from AD, to AD3. AD2 AD3 AD1 Real GDP (trillions of 2012 dollars)
changes in step with the price level to Long run aggregate supply is the relationship between the quantity of real GDP supplied and the price level when the maintain full employment O A. interest rate O B. real wage rate O C. money wage rate O D. quantity of money Short-run aggregate supply is the relationship between the quantity of supplied and the when the money wage rate, the prices of other resources, and potential GDP remain constant O A. potential GDP, price level O B. real GDP, price level O C. nominal GDP, exchange rate O D. real GDP, interest rate
tion 6 According to aggregate supply and aggregate demand analysis, what happens to P (price level) and Q (GDP) if X increases? Oa. Prices decrease and GDP decreases. O b. Prices increase and GDP decreases. Oc Prices stay the same and so does GDP i AS and AD curves shift by the same amount O d. Prices increase and GDP increases. estion will save this response.
An economy has a recessionary gap. With no change in aggregate demand, how does the economy return to full employment? O A. The money wage rate rises, real GDP increases, and the price level falls. O B. The money wage rate falls, real GDP increases, and the price level rises. O C. The money wage rate falls, aggregate supply increases, and the price level falls. O D. The money wage rate rises, real GDP decreases, and the price level rises. -to ooloct vour answer.
6. Why the aggregate supply curve slopes upward in the short run In the short run, the quantity of output that firms supply can deviate from the natural level of output if the actual price level in the economy deviates from the expected price level. Several theories explain how this might happen. For example, the sticky-wage theory asserts that output prices adjust more quickly to changes in the price level than wages do, in part because of long-term wage contracts. Suppose a firm signs a contract agreeing to pay its workers $15 per hour for the next year, based on an expected price level of 100. If the actual price level turns out to be 90, the firm's output prices will , and the wages the firm pays its workers will remain fixed at the contracted level. The firm will respond to the unexpected decrease in the price level by v the quantity of output it supplies. If many firms face similarly rigid wage contracts, the unexpected decrease in the price level causes the quantity of output…
Assume the economy has positively sloped AS curve. A leftward shift of the AD curve will result in O A. a decrease in prices and no change in real GDP.OB. an increase in both real GDP and prices.O C.a decrease in both real GDP and pricesO D.an increase in prices and no change in real GDPO E.an increase in real GDP and no change in prices.OF. a decrease in real GDP and no change in prices.

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