Figure: Inflationary and Recessionary Gaps Price level Price level SRAS P₂ *** P₁ AD P₂ Panel (a) P₁ LRAS Panel (b) Real GDP LRAS Y Y₁ Real GDP SRAS AD Refer to Figure: Inflationary and Recessionary Gaps. If the economy is in short-run equilibrium at Y, in panel (a), the economy is in: full employment. a recessionary gap. an inflationary gap. O simultaneous short-run and long-run equilibrium.

Figure: Inflationary and Recessionary Gaps Price level Price level SRAS P₂ *** P₁ AD P₂ Panel (a) P₁ LRAS Panel (b) Real GDP LRAS Y Y₁ Real GDP SRAS AD Refer to Figure: Inflationary and Recessionary Gaps. If the economy is in short-run equilibrium at Y, in panel (a), the economy is in: full employment. a recessionary gap. an inflationary gap. O simultaneous short-run and long-run equilibrium.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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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.
Price level Figure 10-7 LRAS SRAS₂ SRASO J H SRAS ADO Real GDP Refer to Figure 10-7. Starting from long-run equilibrium at point F, at which of the following points would short-run equilibrium occur following a drought in the Midwestern states? O al O b. F OC.G O d.H
1. The basic aggregate demand and aggregate supply curve model help explain A) fluctuations in real GDP and the price level. B) long-term growth. C) price fluctuations in an individual market. D) output fluctuations in an individual market. 2. The demanded. shows the relationship between the price level and quantity of real GDP A) consumer price index B) aggregate expenditure line C) 45-degree line D) aggregate demand curve
Exhibit 14A-2 Macro AD-AS Model Price Level CPI 130 120 110 100- - 8 90 0 9.0 9.6 LRAS SRAS 10.0 10.5 AD L 11.0 Real GDP (trillions of dollars per year) F 11.5 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.
Figure 34-3 PRICE LEVEL a a a LRAS Y, Y₂ QUANTITY OF OUTPUT SRAS. SRAS. AD Refer to Figure 34-3. Starting from point B and assuming that aggregate demand is held constant, in the long run the economy is likely to experience a falling price level and a falling level of output, as the economy moves to point C. falling price level and a rising level of output, as the economy moves to point A. rising price level and a falling level of output, as the economy moves to point A. Orising price level and a rising level of output, as the economy moves to point C.
Figure 6 PRICE LEVEL LRAS Y, Y₂ QUANTITY OF OUTPUT SRAS; SRAS, AD 15. Refer to Figure 6. Starting from point A and assuming that aggregate demand is held constant, in the long run the economy is likely to experience a a. falling price level and a falling level of output, as the economy moves to point C. b. rising price level and a falling level of output, as the economy moves to point B. c. falling price level and a rising level of output, as the economy moves to point B. d. rising price level and a rising level of output, as the economy moves to point C.
The following graph shows aggregate demand and short-run aggregate supply. Price level 1.) Use the line drawing tool to show the effect of an adjustment of workers and firms to a higher than expected price level. Properly label this line. SRAS, 2.) Use the point drawing tool to show the new equilibrium price level and real GDP. Label this point 'B'. Carefully follow the instructions above, and only draw the required objects. A ADO
Figure 16-1 Price level A) E to A. B) C to D. C) A to E. D) C to B. E) D to C. A Save LRAS D B E Real GDP Refer to Figure 16-1. Suppose the economy is in short-run equilibrium above potential GDP and no policy is pursued. Using the static AD-AS model in the figure above, this would be depicted as a movement from U SRAS AD 3 AD₂ AD₁
Most economists reason that an economy adjusts to inflationary and recessionary gaps slowly because are fixed in the short run. Consumer preferences Тахes Wages Supplies of most of the inputs
Price level 110 105 100 96 1 AS Ful employment. AD₂ AD₁ 50 51 Real GDP (trillions of dollars per year) Suppose the economy in Exhibit 11-2 is in equilibrium at point E, and the marginal propensity to consume (MPC) is 0.75. Following Keynesian economics, the federal government can move the economy to full employment at point E₂ by: A increasing government tax revenue by approximately $33 billion. B decreasing government tax revenue by $100 billion. increasing government tax revenue by $100 billion. decreasing government tax revenue by $750 billion. decreasing government tax revenue by approximately $33 billion.
Figure: Policy Alternatives Panel (a) Price level P₁ P₂ P₁ LRAS SRAS, AD₁ Y₁ YpY₂ Real GDP SRAS₂ A) an inflationary gap. B) a recessionary gap. C) no gap. D) long-run equilibrium. m Yes Predictions On Styles Ty Price level Page 4 P₁ Droon P₂ Voice Panel (b) LRAS * SRAS₁ Y₁ Yp Y₂ 11. (Figure: Policy Alternatives) In Panel (a), suppose that the initial equilibrium is at real GDP level Y₁ and price level P₂. At real GDP level Y₁ there is: AD₁ Real GDP 19 AD₂ 100%
Price level (P) LRAS SRAS2 SRAS, В A AD2 AD, Real GDP (7) Based on the graph, a decrease in Point D to Point A could cause the economy to move from government spending exports on apples restrictions from the Environmental Protection Agency on car production in the U.S. inflation the demand for consumer goods Question 8 Suppose housing values fell during the recession of 2008. Therefore, O the price level will fall as the aggregate demand curve shifts to the left.