d. Suppose an economy is in long-run equilibrium with aggregate demand and supply curves intersecting along the long-run aggregate supply (LRAS) curve The aggregate supply curve shifts to the left due to an increase in oil prices. What would be the impact of an increase in money supply in order to accommodate the inflation? In this situation, the impact of an increase in the money supply in order to accommodate the inflation, will be to shift the thus prices, and causing GDP to

d. Suppose an economy is in long-run equilibrium with aggregate demand and supply curves intersecting along the long-run aggregate supply (LRAS) curve The aggregate supply curve shifts to the left due to an increase in oil prices. What would be the impact of an increase in money supply in order to accommodate the inflation? In this situation, the impact of an increase in the money supply in order to accommodate the inflation, will be to shift the thus prices, and causing GDP to

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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#6
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3. Suppose an economy is in long run equilibrium. 3.1 use the model of aggregate demand and aggregate supply to illustrate the initial equilibrium (call it point A). Be sure to include both short run and long run aggregate supply. 3.2 The central bank raises the money supply by 5 percent. Use your diagram to show that what happen to output and the price level as the economy moves from the initial to the new short run equilibrium (Call it point B). 3.3 Now show the new long-run equilibrium (call it point C). what cause the economy to move from point B to point C?
Consider the figure to the right. If this country's government decides to increase its short-term spending, what happens to the short-run equilibrium price level, and why? Is this an example of demand-pull or cost-push inflation? Explain. 1.) Using the line drawing tool, draw either a new aggregate demand (AD) curve or a new short-run aggregate supply (AS) curve that shows the effects of temporary government spending increases. Properly label your line. 2.) Using the point drawing tool, indicate the economy's new short-run equilibrium price and level of real GDP. Label this point 'E₂.' Carefully follow the instructions above, and only draw the required objects. Price Level LRAS₁ Real GDP per Year (S trillions) AS₁ AD₁
1. Discuss what factors shift the LRAS curve to the right (what increases long run aggregate supply). 2. Explain the following shifts by using the LRAS-AD diagram : a) Increase in both equilibrium real GDP and price level. b) A decrease in equilibrium real GDP and an increase in price level.
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3. Explain whether each of the following events will increase, decrease, or have no effect on longrun aggregate supply in your country. a. There is an increase in immigration into your country. b. Your government introduces a minimum wage above the market-clearing wage rate. c. Intel invents a new and more powerful computer chip. d. A severe flood damages factories.
.Explain why aggregate demand (AD) curve is negatively sloped by taking the link between the goods market and money market
1) What effects might each of the following have on aggregate demand/aggregate supply? In each case use a diagram to illustrate the effect, explain why shifts occurred, and state the impact of each event on the price levels, the unemployment rate, and real GDP. a. Congress passes into law a $1.5 billion cut in personal income taxes. b. Significant technological advances in the renewable energy sector decrease the price of all electricity by 50% c. Increases in consumer confidence lead to a positive demand shock.
3/25/22, 8:59 PM Assignment Print View 8. Assume the economy is currently in equilibrium at its full-employment level of output, the money market is in equilibrium, and the MPC = 0.75. a. Suppose there is an increase in government spending that causes aggregate demand to increase by $16 billion. Show the increase in aggregate demand on the graph. Instructions: Use the tool provided "Aggregate Demand" to plot the new aggregate demand curve. Use the tool provided "New GDP" to plot the new equilibrium. AD and AS Model 200 Tools LRAS 180 AS 160 Aggregate Dei New GDP 140 120 100 80 60 AD 40 20 16 32 48 64 80 96 112 128 144 160 Real GDP (billions of dollars) Now suppose the Federal Reserve wants to keep inflation from hurting the economy and maintain output at the full-employment level. https://ezto.mheducation.com/hm.tpx?todo=c15SinglePrintView&singleQuestionNo=8.&postSubmissionView=13252718377637707&wid=13252718466136846&rol... 1/3 Price Level
8a. Assume that an economy is at equilibrium at its potential GDP at $10 trillion and aprice level of 100. What would be the short-run impact of a significant fall in consumer confidence about the future? Provide an AD/AS model to support your answer. b. What policy would you recommend to the chairperson of the Federal Reserve? Be specific. Show the effect of this policy on your graph part a. c. What are the major goals of the Fed's monetary policy?