Discuss about the three time horizons and what is the difference between the immediate short-run (ISR) and the short-run (SR) aggregate supply? a) In the immediate short run (IMR), ( input, output, both input & output ) prices are fixed, and the aggregate supply curve is ( upward sloping, downward sloping, horizontal , vertical ), and firms collectively supply exactly the level of output demanded at any given price level. b) In the short run (SR), ( input, output, both input & output ) prices are fixed or nearly fixed, and the aggregate supply curve is ( upward sloping, downward sloping, horizontal , vertical ) This is because nominal wages and input prices adjust only slowly to changes in the price level. With this curve, an increase in the price level increases real output and a decrease in the price level reduces real output. c) In the long run, all prices are ( fixed, flexible ) and the aggregate supply curve is ( upward sloping, downward sloping, horizontal , vertical ) at the economy's ( f_ output, because the rise in wages and other inputs will match changes in the price level. ) level of The main difference between the immediate short-run and the short-run aggregate supply is then the flexibility of ( input, output ) prices in the short run.
Discuss about the three time horizons and what is the difference between the immediate short-run (ISR) and the short-run (SR) aggregate supply? a) In the immediate short run (IMR), ( input, output, both input & output ) prices are fixed, and the aggregate supply curve is ( upward sloping, downward sloping, horizontal , vertical ), and firms collectively supply exactly the level of output demanded at any given price level. b) In the short run (SR), ( input, output, both input & output ) prices are fixed or nearly fixed, and the aggregate supply curve is ( upward sloping, downward sloping, horizontal , vertical ) This is because nominal wages and input prices adjust only slowly to changes in the price level. With this curve, an increase in the price level increases real output and a decrease in the price level reduces real output. c) In the long run, all prices are ( fixed, flexible ) and the aggregate supply curve is ( upward sloping, downward sloping, horizontal , vertical ) at the economy's ( f_ output, because the rise in wages and other inputs will match changes in the price level. ) level of The main difference between the immediate short-run and the short-run aggregate supply is then the flexibility of ( input, output ) prices in the short run.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Transcribed Image Text:Discuss about the three time horizons and what is the difference between the immediate short-run
(ISR) and the short-run (SR) aggregate supply?
a) In the immediate short run (IMR), ( input, output, both input & output ) prices are fixed, and
the aggregate supply curve is ( upward sloping, downward sloping, horizontal , vertical ), and
firms collectively supply exactly the level of output demanded at any given price level.
b) In the short run (SR), ( input, output, both input & output ) prices are fixed or nearly fixed, and
the aggregate supply curve is ( upward sloping, downward sloping, horizontal , vertical ) This is
because nominal wages and input prices adjust only slowly to changes in the price level. With
this curve, an increase in the price level increases real output and a decrease in the price level
reduces real output.
c) In the long run, all prices are ( fixed, flexible ) and the aggregate supply curve is ( upward sloping,
downward sloping, horizontal, vertical ) at the economy's ( f_
output, because the rise in wages and other inputs will match changes in the price level.
) level of
e
The main difference between the immediate short-run and the short-run aggregate supply is then the
flexibility of ( input, output ) prices in the short run.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education