Figure 11.2 shows the relationship between the price level and real GDP. Suppose the economy is currently at e'. A leftward shift of the short-run aggregate supply curve would return the economy to potential output at:Figure 11.2Potential outputPrice levelLRASSRASP1P2eP3AD'AD*ADRealGDP(trillions ofdollars)a. point e*.b. point e".c. point e.d. a point higher than e".e. a point between e" and e*.

The aggregate demand curve represents the total demand of goods and services in an economy. The…

Figure 11.2 shows the relationship between the price level and real GDP. Suppose the economy is currently at e'. A leftward shift of the short-run aggregate supply curve would returm the economy to potential output at: Figure 11.2 Potential output Price level LRAS SRAS P. P. AD AD AD Real Q. GDP(trillions of dollars) Q. O a. point e*. O b. point e". O c. point e. O d. a point higher than e". O e. a point between e" and e*.

Figure 11.2 shows the relationship between the price level and real GDP. Suppose the economy is currently at e'. A leftward shift of the short-run aggregate supply curve would returm the economy to potential output at: Figure 11.2 Potential output Price level LRAS SRAS P. P. AD AD AD Real Q. GDP(trillions of dollars) Q. O a. point e. O b. point e". O c. point e. O d. a point higher than e". O e. a point between e" and e.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Figure 10.3 P AS2 P2 P1 AD: Y2 Which of the following is not true in Figure 10.3: O The economy is going through a stagflationary period O The cost of crude oil has increased Output is stagnating, while inflation is increasing O Offshore wind farms are delivering cheap energy
Price Level 0 A B Real GDP Comparing points A and B on this graph, which of the following is true? O At point B, there would be less employment and higher unemployment than at point A. O At point B, there would be a lower wage than at point A. O At point B, there is a higher price level that increases the quantity of real GDP supplied. O At point A, there is greater pressure on the price level and inflation than at point B. O At point A, with a lower wage rate, aggregate supply has decreased compared to point B.
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O Question 4 In the long-run, an increase in the labour force leads to A a decrease in the equilibrium price level and real GDP B a decrease in the equilibrium price level and an increase in real GDP. с an increase in the equilibrium price level and real GDP D an increase in the equilibrium price level and a decrease in real GDP Question E O E C Di P 3
Refer to the information provided in the figure at right to answer the question that follows. The level of aggregate output that can be sustained in the long run without inflation O A. is $400 million. B. is $700 million. O C. is $800 million. O D. cannot be determined from this information because aggregate demand is not given. Price level, P LRAS AS :800 400 700 Aggregate output (income), Y ($ million)
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The observed correlation between the price level and real GDP may be low because O consumption is procyclical. O the central bank acts to target the price level. O money demand increases when the nominal interest rate rises. O money demand does not depend on income.
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Suppose that the economy is depicted in the graph to the right. a. The equilibrium price level and real GDP in this economy are respectively OA. 80, $10 trillion. OB. $80; $10 trillion. OC. 80 trillion; 10. OD. $80 trillion; $10 trillion. b. Using the line drawing tool, show a change in aggregate demand that leads to an inflationary gap. Label this new line 'AD₁'. Carefully follow the instructions above, and only draw the required objects. to search
Think of the AD-AS model with an upward-sloping AS curve. Suppose the economy is initially at its long-run equilibrium. What is the impact of an unexpected increase in money supply in the short run and in the long run? O a. In the short run, output rises above its natural level. In the long run, output returns to its natural level and the price level is higher than what it was initially. O b. In the short run, output falls below its natural level. In the long run, output returns to its natural level and the price level is higher than what it was initially. O c. In the short run, output rises above its natural level. In the long run, output returns to its natural level and the price level is lower than what it was initially. O d. In the short run, output falls below its natural level. In the long run, output returns to its natural level and the price level is lower than what it was initially.
PRICE LEVEL O a. C to D. Ob. D to C. Oc.B to A Od. A to B. D LRAS O B AD QUANTITY OF OUTPUT SRAS, SRAS AD Refer to Figure 34-2. If the economy is in long-run equilibrium, then an adverse shift in short-run aggregate supply would move the economy from