Exhibit 14A-2 Macro AD-AS Model Price Level CPI 130 120 110 100 90 0 9.0 9.6 LRAS SPAS AD L 10.0 10.6 11.0 L 11.5 Real GDP (trillions of dollars per year) In Exhibit 14A-2, the long-run aggregate supply curve represents: potential real GDP output for this economy. that the economy is experiencing zero inflation. that the economy is experiencing a recessionary gap. the level of real GDP where the unemployment rate is zero.

Exhibit 14A-2 Macro AD-AS Model Price Level CPI 130 120 110 100 90 0 9.0 9.6 LRAS SPAS AD L 10.0 10.6 11.0 L 11.5 Real GDP (trillions of dollars per year) In Exhibit 14A-2, the long-run aggregate supply curve represents: potential real GDP output for this economy. that the economy is experiencing zero inflation. that the economy is experiencing a recessionary gap. the level of real GDP where the unemployment rate is zero.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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illustrates and how it is related to the aggregate demand curve. 3. Figure 11.8 shows the aggregate expenditure curve when the price level is 110. When the price level rises to 120, the AE curve shifts vertically downwards from AE, by $1 trillion. When the price level falls to 100, the AE curve shifts vertically upwards from AE, by $1 trillion. Figure 11.8: FIGURE 11.8 Short Answer Problem 10 (a) 8 Price level (GDP deflator) Aggregate planned expendit (trillions o FIGURE 11.9 Short Answer Problem 10 (b) 130 a. Draw two new AE curves in figure 11.8 for the price levels of 100 and 120. What are the equilibrium levels of aggregate expenditures for these two price levels? Label as 'b' the equilibrium point when the price level is 100 and 'c' as price level is 120. 120 b. Use figure 11.8 to obtain three points 'a', 'b' and 'c' on the aggregate demand curve. Plot these three points on figure 11.9. Assume that the aggregate demand curve is linear and draw the AD curve on figure 11.9. Figure…
7. The long-run aggregate supply curve and short-run adjustments Suppose an economy's short-run aggregate supply curve (SRAS), current equilibrium aggregate price level (P₁), and real GDP (Q1) are shown on the graph that follows. The economy currently has Natural Real GDP (QN) of $6 trillion. Use this information to place the orange long-run aggregate supply curve (LRAS, square symbols) in the correct position on the graph. 20 PRICE LEVEL 0 2 4 6 Q₁ REAL GDP (Trillions of dollars) 8 SRAS 10 LRAS
Critically discuss the short-run and long-run effects on output and the price level using the AD-AS diagram: (a) The central bank responded by printing more money. (b) Suppose that the economy is in the long-run equilibrium. The central bank would like to return the economy to the pre-Covid-19 long-run equilibrium; explain how the central bank could achieve this goal.
In the figure at right, if the relevant aggregate demand curve is AD2, what type of gap exists and how large is it? A. inflationary gap of $500 billion B. recessionary gap of $500 billion C. recessionary gap of $1 trillion D. inflationary gap of $1 trillion
LAS 100 90 X 80 70 110 60 0 320 360 below full-employment; 40 above full-employment; 20 below full-employment; 20 above full-employment; 40 actual; 0 SAS 400 440 480 520 Real GDP (billions of 2007 dollars) Figure 10.3.1 AD Refer to Figure 10.3.1. The economy is at its short-run macroeconomic equilibrium. There is a difference between equilibrium real GDP and potential GDP of $ billion.
PLEASE EXPLAIN IT
28. Assuming Aggregate Demand and Aggregate Supply are initially at ADo and ASo, and AD1 and AS1 represent changes, which of the above graphs depict the economy's self-correcting mechanism at work? a) Figures A & B b) Figures A & C c) Figures C & D d) Figures B & D
170 Price 140 level 120 100 D AD5 AD4 AD 3 AD, AD2 3.0 4.0 5.0 6.0 7.0 8.0 Real GDP In Exhibit 20-8, if aggregate demand shifts from AD₁ to AD3, O a. real GDP will increase from $3.0 to $4.0, and the price level will increase from 100 to 140. Ob. real GDP will increase from $3.0 to $7.0, and the price level will increase from 100 to 120. Oc. real GDP will increase from $3.0 to $7.0, and the price level will increase from 100 to 140. Od. real GDP will increase from $3.0 to $4.0, and the price level does not change.
Price level Potential output SRAS P3 PI P2 Real GDP Y1 Y3 Refer to Exhibit 10.1, which shows the short-run aggregate supply (SRAS) curve of an economy. At a price of P2, firms will O supply less than potential output. O supply more than potential output. O supply potential output. O increase prices. O decrease prices.
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Suppose that the dynamic aggregate demand curve in Swaziland is determined by the equation M + U-6%. Using this information, draw Swaziland's dynamic aggregate demand curve on the graph. 14 13 12 Aggregate deman 10 8 5 4 3 2 -4 -3 2 1 0 1 2 3 45 678 9 10 Real GDP growth rate