Explain, using the AD-AS model, the effect of an increase in investment in the macroeconomy on the equilibrium price level and the equilibrium level of output. (10)
Q: According to the AS-AD model, which of the following is true about output when there is an increase…
A: "Macro-economic equilibrium is attained at a point where aggregate demand (AD) equates(intersects)…
Q: Suppose firms are optimistic about the outlook of the economy and they decide to increase…
A: The equilibrium is established where the aggregate demand and aggregate supply are equal. The…
Q: For the January 2020 Press Release, answer the following question. a. For Columns 2, 3, 5, 6 use…
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Q: If the AS/AD Equilibrium level of Real GDP is greater than the Full Employment Level of Real GDP,…
A: The economics as a study is based upon the basic idea of scarcity, which implies that the total…
Q: Refer to the diagram, in which Y2 is the full-employment output. If the econormy current aggregate…
A: The overall quantity of services and commodities required for all completed items in an economy is…
Q: Suppose in 2020 the US economy was in a short run equilibrium below full employment, such that GDP…
A: The aggregate demand curve(AD) shows the different combinations of GDP level and price level in the…
Q: Which of the following is a correct statement about the difference between chain-weighted and…
A: The chain-weighted method and the fixed-weighted methods are used to calculate the growth rates of…
Q: Suppose concerns about the size of the federal budget deficit lead the U.S. Congress to cut all…
A: As technology growth falls, production becomes less efficient. This leads producers to produce less,…
Q: Assume that an economy is initially operating at the natural rate of output (full employment…
A: AS-AD model is one of the most important model of macro economic analysis in order to determine the…
Q: Suppose, initially the Australian economy is at full employment (in other words the economyis at the…
A: The full employment level reflects the long run output level, where the economy produce at its…
Q: Use the basic AD-AS model to illustrate and describe the effect of unexpected increase in the oil…
A: The unexpected increase in the price of oil means that the cost of production in the economy will…
Q: Question 3. Define stagflation. Using AD/AS diagram, examine the possible factors that can lead to…
A: The economies around the world tend to operate upon the basis of the forces of expenditures, and…
Q: Using the aggregate demand and aggregate supply (AD-AS) diagram, explain what will happen to the…
A: Equilibrium is obtained where the aggregate supply curve equals the aggregate demand curve. It means…
Q: include a graph that shows where Canada currently is on the business cycle. Also include an AD-AS…
A: The economies around the world works according to the changes in the changes in their consumption…
Q: AS' AS Price Level P2 P1 AD Y2 Y1 Real National Income 5. The graph above reflects a significant…
A:
Q: Explain and illustrate graphically recessionary and inflationary gaps.
A: The aggregate demand curve(AD) shows a different combination of quantity of real GDP demanded and…
Q: Suppose, initially the Australian economy is at full employment (in other words the economy is at…
A: The following cases are analyzed as follows:
Q: macroeconomic equilibrium is equal to potential GDP. Americans are becoming more cautious with their…
A: AD - AS Model The AD-AS model clarifies how changes in government strategies, variances in…
Q: Explain, using the AD-AS model, the effects of an increase in investment in the macroeconomy on the…
A: Macroeconomics is a sub-part of economics that is used to understand, the policies and fiscal…
Q: In the long run, an increase in AD will result in: no change in the aggregate price level. increases…
A: shifting of demand curve can cause changes in price level so we can choose the correct option as…
Q: Other things being equal , an exogenous rise in the domestic price level will. A) have no effect on…
A: An increase in domestic price implies the goods have become expensive now. This indirectly decreases…
Q: Explain, using the AD-AS model, the effect of an increase in investment in the macroeconomy on the…
A: We’ll answer the first question since the exact one wasn’t specified. Please submit a new question…
Q: In the short run, what is the impact on the price level and the level of the real GDP of each of the…
A: In equilibrium, the supply and demand curves intersect at E and the price level is at P0 and GDP…
Q: In our modern economy, the adjustment process necessary to eliminate a recessionary gap is very…
A: The adjustment process implies a self-adjustment mechanism through price adjustment. This…
Q: observed correlation between the price level and real GDP may be low because
A: The price level in an economy is negatively correlated to the real GDP.
Q: Using a separate set of AS-AD diagrams for each of the following scenarios, explain what is likely…
A: The AD-AS (aggregate demand-aggregate supply) model depicts however value is set and the way worth…
Q: Find the market-clearing real wage rate What happens if the government imposes a minimum wage of 40?…
A: Given : MPN (W)= 200 – 0.5N Supply of labour=100 + 4w 1. Market Clearing real wage rate : The…
Q: Suppose, initially the Australian economy is at full employment (in other words the economyis at the…
A: The AD-AS model (compound demand collection) is a way of demonstrating the determination of national…
Q: The outbreak of COVID-19 adversely attacks most economies. Some economists argue that the impacts on…
A: Supply chain refers to the network between the producer and different kinds of sellers of the…
Q: Discuss how the AD/AS model can explain economic growth, recessions, as well as changes in…
A: The Aggregate Demand and Aggregate Supply(AD/AS) curves helps one to find the relationship between…
Q: as you analyze the dismal United States economic environment, you notice that unemploymentis…
A: All the countries goes through changes and fluctuations in the economic activities. Sometimes, the…
Q: Because the long-term trend has been for prices to rise, adjusting Nominal GDP to Real GDP involves…
A: GDP: GDP or gross domestic product is the sum total of the final value of the products that are…
Q: Using graphical illustration of AS-AD framework, show the effects of following events on real output…
A: In the AS-AD model, equilibrium is at such a price level where the aggregate quantity demanded…
Q: Assume that an economy currently experiences an decrease in both employment and real GDP. The…
A: The Gross Domestic Product is the summation of the money value of all the final goods and services…
Q: Assume that output began at its natural level. By using AD-AS (Upward sloping) and Philips curves…
A: Philips curve: It refers to the curve under which the relationship between inflation and…
Q: If nominal GDP rises: real GDP must fall. real GDP must also rise. real GDP may either rise or fall.…
A: Nominal GDP is the value of the basket of all goods and services at the current year prices. So,…
Q: IF A2 2. What happens to domestic income in the AS–AD model when the price of a critical, imported,…
A: In this, demand for the inputs is critical as input is used actively in the domestic production and…
Q: Suppose the economu is operating at less than full employment. an increase in aggregate demand will…
A: The aggregate demand curve shows the inverse relationship between the price level and the total…
Q: The unemployment rate may underestimate the true extent of unemployment if: many part-time…
A: In an economy, unemployment rate is the proportion of labor force that is actively looking for job…
Q: Relating DSGE and AS/AD for a shock to government purchases: Consider thecomplete dynamic response…
A: The DSGE which stands for dynamic stochastic general equilibrium is a macroeconomic model which…
Q: The equilibrium price level and the equilibrium level of real GDP are jointly determined by the…
A: Aggregate demand(AD) represents an inverse-relationship between the price(P) and the quantity(Q)…
Q: Price Level on AS/AD model can best be described as a: a. GDP deflator (inflation) b. The prices…
A: In the AD-AS model, it can be seen that the aggregate demand curve shows the demand for total output…
Explain, using the AD-AS model, the effect of an increase in investment in the
macroeconomy on the
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- Will the shift of SRAS to the right tend to make the equilibrium quantity and price level higher or lower? What about a shift of SRAS to the left?Explain, using the AD-AS model, the effects of an increase in investment in the macroeconomy on the equilibrium price level and the equilibrium level of output.Now assume that the contraction in the Singaporean economy is mainly driven by supply side factors, Show the short-run effects of this using the AD-AS model. Carefully explain in words (100 or less).
- Use the AD-AS model to explain the impact of a general increase in productivity on the general price level and the level of real production and income in the economyWhat is the condition of the U.S. economy now (phase of business cycle, GDP growth rate, unemployment rate, inflation rate)? What actions have the U.S. government taken? What are the impacts of these actions in an AD-AS framework?Use the basic AD-AS model to illustrate and describe the effect of unexpected increase in the oil prices on macroeconomic equilibrium output, price level and (un)employment in short-run. Additionally, also explain graphically, how the economy adjusts back to long-run equilibrium.
- Suppose firms are optimistic about the outlook of the economy and they decide to increase investment. Also suppose that, simultaneously, there is a reduction in business taxes. Use the AD-AS graph to show what happens to the price level and output as a result.The government of Australia has embarked on various policies in order to reduce the severity of COVID 19 on the economy. Has COVID 19 caused economic expansion or a recession? Explain your answer using at least two economic effects on the economy of AustraliaWhat variable allows our macroeconomic model to automatically adjust GDP back to full employment level of output (i.e., LRAS or trend GDP)? Question 45 options: changes in the money supply changes in nominal wages changes in nominal interest rates changes in the CPI
- For each situation below, analyse whether it shifts the aggregate demand (AD) curve, the aggregate-supply (AS) curve, both, or neither. Then, if it does shift a curve, construct the AD-AS diagram to show the effect on the economy in the long-run. a) One extraordinary impact of COVID-19 pandemic to the U.S. economy is a massive increase in saving. U.S. recorded nearly tripled saving over the first two quarters of 2020, from $1.59 trillion annualized in the first quarter to $4.69 trillion in the second, which is by far the biggest increase in modern history. b) The prolonged monsoon rain has caused the production of vegetables in Cameron Highlands fell by about 30%. It has severely impacted a lot of crops, including fruits and flowers. Besides, labor shortages due to the pandemic makes the matters worse.Question 1 a) Give the definition of GDP and explain what items are not included in its calculation? b) How is GDP calculated using the expenditure approach? c) How is GDP calculated using the income approach? d) Explain the problem of "double-counting" and how it can be avoided in calculating GDP Question 2 Assume that an economy is initially operating at the natural rate of output (full employment output). Use the AD-AS model to illustrate graphically the effects on price and output of an increase in government spending and a decrease in the cash rate. Explain your assumptions with respect to the range of aggregate supply of your analysis.Suppose, initially the Australian economy is at full employment (in other words the economyis at the potential GDP). Using AD-AS model, explain how would each of the following eventsaffect the economy both in the immediate and in the long term. An increase in consumer confidence.
