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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Which of the following could potentially cause a recession? O AD increases, and wages are sticky. O AD increases, and wages are flexible. O AD falls, and wages are flexible. AD decreases, and wages are sticky.
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
Price level (GDP priceindex) Real GDP demanded Real GDP supplied (trillions of 2005 yen) 75 600 400 105 450 550 135 300 700 The short-run macroeconomic equilibrium real GDP is ¥------ trillion and the equilibrium price level is ------. The size of the (recessionary , or inflamatory) gap is ¥-------- trillion.
Question 15 An Inflationary gap is diagnosed when: O National Income Equilibrium is less than Full employment. O National Income Equilibrium is less than Full employment. O National Income Equilibrium is greater than Full employment. O Cannot be diagnosed by comparing national income equilibrium and Full employment levels.
The figure to the right shows an economy in a short-run equilibrium at point A Using the three-point curved line drawing tool, illustrate cost-push inflation. Properly label this curve Note: Carefully follow the instructions above and only draw the required object. Which of the following is most likely to cause the cost shock that shifts the AS curve consistent with cost-push inflation? A. A surge in the price of crude oil. OB. A tax increase on households. OC. An increase in the size of government. OD. A flood of new immigrants. Price level, Pa AD₂ Yo Aggregate output (income), Y AS du
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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.
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