2 If the current short-run equilibrium level of output is less than full-employmentoutput, we can expect that in the long runa) the price level will fall.b) long-run aggregate supply (LRAS) will decrease.c)aggregate demand (AD) will decrease.d) AD will increase.e) the price level will rise.

Answered: Image /qna-images/answer/7fbce52c-a2cf-4b5c-85b4-e026b755cfc9.jpg

Answered: If the current short-run equilibrium…

If the current short-run equilibrium level of output is less than full-employment output, we can expect that in the long run

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter14: Aggregate Demand And Supply

Section14.A: The Self Correcting Aggregate Demand And Supply Model

Problem 3SQP

See similar textbooks

Related questions

Q: • An engineer has a talent t in {1,2} with equal probability (prob=1/2), and the value of t is…

A: A Bayesian Nash equilibrium is a concept from game theory that extends the traditional Nash…

Q: Foreign Trade Zones Cajas, Inc, is considering opening a new warehouse to serve the Southwest…

A: Definition: A tariff is a tax on goods and services imported into a country. It is typically used to…

Q: 4) The demand for labor by an industry is given by the curve L = 1200 - 10w, where L is the labor…

A: ***Since the student has posted multiple questions, hence, the expert is required to solve only the…

Q: Using the model of Aggregate Demand and Supply, explain the impact of Brexit on the Irish Economy,…

A: With increased global integration of trade and economic activities, it is more important than ever…

Q: (b) During a nationwide program to immunize the population against a new strain of the flu, public…

A: Answer: Given: Total cost function: Cx=1.85x100-xwhere x is the percentage of susceptible population…

Q: Mike Carlton, financial analyst at MVR Corporation, is examining the behavior of quarterly utility…

A: Total Cost: The term total cost refers to the cost that includes the total variable cost and the…

Q: 7 If the price of Chinese food decreases, there will be an (increase/decrease) in the…

A: Demand is the willingness to buy backed by the purchasing power. The law of demand states that…

Q: 2. Alice maximizes expected utility with an index u(x) √x where x is the total annual income. Her…

A: In certainty equivalence the preference of the consumer is an assured amount rather a higher return…

Q: Critically evaluate why does having relevant industry experience help the founder or founders of a…

A: Economic Growth: It is the financial development of the economy. It can be characterized as the…

Q: Businesses in the nation of Islandia have been accumulating cash because they have a pessimistic…

A: GDP is the gross domestic product. GDP is the money value of all goods and services produced in an…

Q: Explain the three characteristics of utility.

A: The economics as a study is based upon the idea that all the societies in the world tend to face a…

Q: A 255.

A: DISCLAIMER “Since you have asked multiple question, we will solve the first question for you. If…

Q: dccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccc…

A: Your question is not visible.

Q: 13. In Avengers: Infinity War the character Thanos seeks to use the power of the infinity stones to…

Q: Consider the neoclassical growth model. Suppose in the current period a country's saving per worker…

A: The Solow–Swan model, sometimes known as the exogenous growth model, is a long-run economic growth…

Q: Chapter 11 Production and Costs – Units of Total Marginal Product Total Variable ATC AVC MC Labor…

A: The law of diminishing marginal return that when more and more variables factors are added with…

Q: Consider the polar case where the demand curve is perfectly inelastic. Use the line drawing tool to…

A: Perfectly inelastic demand defines the condition when a change in the price of a commodity does not…

Q: An economy with no government is described by the following: • Marginal propensity to consumer = 0.8…

A: An inflationary output gap refers to the macroeconomic concept which measures the difference between…

Q: Insurance Diagram Total Utility E U(W-L) B W-L P(W-L)+(1-p)W Expected If an insurance company…

A: * ANSWER :- By using given data the matching are given below

Q: Include correctly labeled diagrams, if useful or required, in explaining your answers. A correctly…

A: Below is the explanation of all four parts and they are as follows-

Q: 14. (continued) What happens to the labor productivity, which is the output per unit of labor, Y/L,…

Q: TIPS FOR READING AN EXCHANGE RATE CHART: Read down the chart.. For example, n column 1 it says the…

A: Foreign exchange rate refers to the rate at which two nations currencies are exchanged . Two types…

Q: A company plans to assign six salesmen to six cities in which it operates. The estimates o sales…

A: Salesman City C1 C2 C3 C4 C5 C6 total S1 42 48 50 38 50 54 282 S2 50 34 38…

Q: Cups of Coffee $6 $5 $4 $3 Demand $2 Osupply $1 $0 Quantity 1. According to the graph above, what is…

A: We have given the demand and supply curve of coffee cups. At a given price, if quantity demand is…

Q: write your answers, as long as they are legible. Most students find that it is easier to hand draw…

A: Answer - Need to find- For final equilibrium point C, why does aggregate output "Pullback" somewhat…

Q: Question Ten firms compete in a market to sell product X. The total sales of all firms selling the…

A: The four-firm concentration ratio alludes to a measure utilized in economics to evaluate the degree…

Q: 5. If a new study shows that eating dark chocolate promotes a healthier lifestyle, the…

A: Change in demand occurs due to change in non price factors like expectation of future prices, change…

Q: 1B True or false with explanation

A: Interest rate parity is a no-arbitrage condition representing an equilibrium state under which…

Q: The People's Republic of China has an estimated $101.54 trillion of capital with a depreciation rate…

A: The contribution of capital is 0.4 and it would affect the GDP accordingly. The rise in capital…

Q: 9-1 a and b

A: The given production possibility curve shows that the economy allocates resources in the production…

Q: 82 66 50 38 32 24 16 8 16 22 25 34 41 Q Use the graph above to answer questions #5-7 about the…

A: We only answer one question so we will answer the first one. Please submit a new question specifying…

Q: Assume that the export price of a Toyota Corolla from Osaka, Japan is ¥2,100,000. The exchange rate…

A: The value of one currency in respect to another is known as an exchange rate. It shows the cost…

Q: lacroeconomics LESSON 6 ACTIVITY 42 Monetary Policy now bring together all of the pieces of the…

A: (A) Fed will use expansionary monetary policy to move the economy to full-employment level because…

Q: 1. Explain why the unemployment rate can give a misleading picture of the health of a given…

A: 1. The national unemployment rate is calculated as a proportion of the entire labor force that is…

Q: see in

A: E onomic growth mostly occurs in large economies population.

Q: If the price of good A increases relative to the price of substitutes Rand C the demand for

A: To find : According to scenario what will happen im change of price .

Q: The demand curves for cases of Coke and Pepsi are given respectively by Qc(Pc. Pe) = 200 - 10pc +…

A: Cournot duopoly is an oligopoly form of market where the producers compete in the quantity to be…

Question

If the current short-run equilibrium level of output is less than full-employment
output, we can expect that in the long run
a) the price level will fall.
b) long-run aggregate supply (LRAS) will decrease.
c)
aggregate demand (AD) will decrease.
d) AD will increase.
e) the price level will rise.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

Dear expert bro hand written not allowed.
Suppose firms become very optimistic about future business conditions and invest heavily in new capital equipment. Show the short-run effect of this optimism on the aggregate-demand curve. Price Level LRAS Quantity of Output AS₂2 AS, The price level has risen. Wages are not sticky. AD₂ AD₁ Prices are sticky. People have misperceptions about the price level. Aggregate Demand Aggregate Supply LRAS Which of the following reasons could explain why the aggregate quantity of output supplied changes? Check all that apply. ?
The economic shutdown after the Covid-19, there was a decrease in Aggregate Demand (AD) and a decrease in Aggregate Supply (AS). What was the short-run impact on real GDP? That is, what happened to the short-run equilibrium real GDP (Y)? Based on real GDP, what happened to unemployment? In the long-run equilibrium, what happens to the long-run price level?
Which of the following are assumed to remain unchanged along a given short-run aggregate supply curve? Check all that apply. A. The position of the aggregate demand curve B. The price level C. Real GDP D. Input prices
sid c:z Suppose policymakers take actions that cause a contraction of aggregate demand. Which of the following is a short- run consequence of this contraction? The level of output decreases. The unemployment rate increases. O The inflation rate decreases. O All of the other answers are correct.
Assume an economy operates in the intermediate range of its aggregate supplycurve. For each of the following changes in conditions, state the direction of theeffect on: aggregate demand, aggregate supply, price level, real GDP.(a) A decrease in government expenditure in infrastructure(b) A severe recession occurs in a country which has been a major importer of thenation’s exports.(c) The federal government increases business taxes with diagram
Assume the economy of Chile is in a long-run equilibrium with full employment. In the short run,nominal wages are fixed.1. Draw a correctly labeled graph of short-run aggregate supply, long-run aggregate supply,and aggregate demand. Show each of the following.a. Equilibrium output, labeled Y1b. Equilibrium price level, labeled PL1 2. Assume that there is an increase in exports from Chile. On your graph in question 1,show the effect of higher exports on the equilibrium in the short run, labeling the newequilibrium output and price level Y2 and PL2, respectively.3. Based on your answer in part (b), what is the impact of higher exports on real wages inthe short run? Explain.4. As a result of the increase in exports, export-oriented industries in Chile increaseexpenditures on new container ships and equipment.a. What component of aggregate demand will change?b. What is the impact on the long-run aggregate supply? Explain.
The aggregate supply curve shows the relationship between real GDP and the average price level. O True O False
Which of the following would cause the long run aggregate supply to decrease?O. A civil war in the country leads to destruction of property and loss of life.O. The Federal Reserve purchases $500 million in bonds from the banks.O. An unusually low temperatures in the midwest results in fewer crops than last year.O. A major breakthrough in extraction (fracking) leads to more efficient drilling of natural gas.
Which of the following will cause a movement along the short run aggregate supply curve? A change in the real interest rate A change in the long run aggregate supply O A change in input prices O A change in the price level
Determine the effect on aggregate demand/ Short Run Agrregate supply of each of the followingevents. Explain whether it represents a movement along the aggregate demand/ Short run Aggregatesupply curve (up or down) or a shift of the curve (leftward or rightward).a) News of a worse-than-expected job market next yearb) A rise in the consumer price index (CPI) leads producers to increase output.c) A rise in legally mandated retirement benefits paid to workers leads producers to reduceoutput.d) As a result of an increase in the value of the dollar in relation to other currencies, Americanproducers now pay less in dollar terms for foreign steel, a major commodity used in production.e) An increase in the quantity of money by the Federal Reserve increases the quantity of moneythat people wish to lend, lowering interest rates.f) Greater union activity leads to higher nominal wages.g) A fall in the aggregate price level increases the purchasing power of households’ and firms’money holdings. As…
If the price level rises and the money wage rate rises by the same percentage, what happens to the quantity of real GDP supplied? Along which aggregate supply curve does the economy move?