Consider the table on the right, which shows businessinvestment in inventories for each quarter from the firstquarter of 2007 to the first quarter of 2012, measured inmillions of 2007 dollars. Provide a macroeconomicexplanation for this pattern. (Hint: When did the recessionduring this period begin and end?)The negative growth of inventories indicates a period ofOA. inflation since inventories needed to be reducedin the face of increasing storage costOB. recession because demand was met by drawingdown past inventories and production did notincrease.OC. recovery since inventories needed to be used tomeet demand.OD. recession because inventories increased due tolack of demandYear2007200820092010201120122013QuarterQ1308889Q2Q3Q4R288828Q1Q2Q3Q4Q1228892889Q2Q3Q4Q1Q2InventoryInvestment(millions of2007 dollars)$3360- 282215,57019,6446061951211,8564699-23647779-4807- 4807266325084841-6805896512,153646221792061729814,09138756031

Business cycle: A business cycle, also known as an economic cycle or trade cycle, refers to the…

Answered: Consider the table on the right, which…

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. Potential GDP (LAS) is $200 then there is a(n) [(Click to select) b. Potential GDP (LAS) is $800 then there is a(n) [(Click to select) c. Potential GDP (LAS) is $850 then there is a(n) [(Click to select) gap of $ gap of $ gap of $
Topic 2. Discuss characteristics of an economy that helps itself correct from a recessionary gap.
09. Consider the following model. Expenditure is given by: E=C+I+G The consumption function is specified as: C=co+cY We assume a closed macroeconomic system so that: Y=E Which is the correct representation of income as a function of autonomous expenditures and the marginal propensity to consume?
All of the following are included in the investment component of aggregate demand except purchase of a new house resale of an existing physical asset expenditure on a new office building O purchase of upgraded computer equipment ē o o O O
The following graph shows the aggregate demand curve in a hypothetical economy. Assume that the economy's money supply remains fixed. PRICE LEVEL (CPI) 180 T 150 140 130 120 110 100 90 80 0 Aggregate Demand 100 200 300 400 500 600 REAL GDP (Billions of dollars) 700 800 (?) Which of the following are reasons the aggregate demand curve is downward sloping? Check all that apply. A higher price level makes domestically produced goods more expensive than foreign goods. A lower price level leads to a lower interest rate. A higher price level decreases consumption through the substitution effect. As the aggregate price level rises, the purchasing power of households' saving balances will demanded to This phenomenon is known as the effect. causing the quantity of output
Which of the following would be removed from the U.S. aggregate demand measurement? a. Japan's purchase of General Electric combines from the United States Ob. A foreign tourist's purchase of New York City Statue of Liberty keychains An American professor's purchase of a vintage manuscript from Rome, Italy O d. China's purchase of soybeans from U.S. farmers
What are the costs associated with large volatility in GDP? bouts of low taxes and high government expenditures bouts of high GDP growth and low inflation rate bouts of high interest rates and high national debt bouts of high inflation and high unemployment rate
Intertemporal substitution of consumption refers to ... the choice of how to divide current spending between two or more goods consumers choice as to how much to consume now and how much to consume in the future whether to financially invest in stocks or bonds how to spend one's time working or taking leisure
A futures market trades contracts on the growth rate for nominal GDP. The contract pays $X to the buyer, where X is 100 times the growth rate in nominal GDP from last year to this year. For example, if nominal GDP grows by 1% over last year, the contract pays $100 (1 x 100). Nominal GDP last year was $28,909 billion. Contracts on the futures markets are currently selling for $513. What is the market's prediction for nominal GDP this year? Put your answer in billions. You may round to two decimal places.
Over a given year, nominal GDP increased by about 2.5%. Over that year, the GDP deflator decreased by about 4%. From this information (and using our Aggregate Supply and Demand framework for analysis), we infer that over this year, Group of answer choices a) real GDP increased, and we had a decrease in Aggregate Demand. b) real GDP decreased, and we had a decrease in Aggregate Supply. c) real GDP increased, and we had an increase in Aggregate Demand. d) real GDP increased, and we had an increase in Aggregate Supply. e) real GDP decreased, and we had an increase in Aggregate Demand.
According to Keynes' Law... The total demand for products determine the level of gross domestic product and may not equal the supply capacity of the economy in the short run. The total supply of products determines the level of gross domestic product and the level of demand in the economy in the long run. The total demand always equals the total supply capacity in the short run. The total demand tends to rise above the total supply capacity in the short run which leads to recessions 10 발 lyi
The following graph shows aggregate demand and short-run aggregate supply. Price level 1.) Use the line drawing tool to show the effect of an adjustment of workers and firms to a higher than expected price level. Properly label this line. SRAS, 2.) Use the point drawing tool to show the new equilibrium price level and real GDP. Label this point 'B'. Carefully follow the instructions above, and only draw the required objects. A ADO

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