### Great DepressionIn 1939, with the U.S. economy not yet fully recovered from the Great Depression, President Roosevelt proclaimed that Thanksgiving would fall a week earlier than usual so that the shopping period before Christmas would be longer.#### Economic Graphs: Aggregate Supply and Demand###### Graph AGraph A illustrates the Long-Run Aggregate Supply (LRAS), Aggregate Supply, and Aggregate Demand. - The LRAS curve is represented by a vertical green line, indicating that in the long run, the quantity of output is not affected by the price level.- The Aggregate Supply (AS) curve is represented by an upward-sloping orange line, indicating a positive relationship between the price level and the quantity of output supplied in the short run.- The Aggregate Demand (AD) curve is represented by a downward-sloping blue line, indicating a negative relationship between the price level and the quantity of output demanded.- The intersection of the three lines suggests an equilibrium point where the quantity of output and the price level are determined in both the short run and the long run.###### Graph BGraph B shows a similar illustration but with a shifted Aggregate Demand curve.- The LRAS curve remains the same as a vertical green line.- The Aggregate Supply (AS) curve remains an upward-sloping orange line.- The Aggregate Demand (AD) curve in this graph has shifted to the right, which may result from an external factor such as increased consumer spending or policy changes.- The new intersection point indicates a higher quantity of output at a potentially higher price level compared to Graph A. This suggests an increase in economic activity and overall demand within the economy.These graphs are useful in understanding the impacts of policy changes on the economy, such as President Roosevelt's decision to move Thanksgiving, which aimed to stimulate economic activity during the Great Depression. ### Understanding Economic Conditions and Policies#### Graphical Representations of Economic StatesIn the two provided graphs, we observe different scenarios of the relationship between aggregate demand and aggregate supply in an economy.**Graph A:**- The vertical axis represents the **Price Level**.- The horizontal axis represents the **Quantity of Output**.- There are two intersecting lines: - The orange line represents **Aggregate Supply**. - The blue line represents **Aggregate Demand**.- The point where these lines intersect reflects the equilibrium in the economy, indicating the balance between supply and demand at a specific price level and output quantity.**Graph B:**- Similar to Graph A, this graph has: - The vertical axis labeled as **Price Level**. - The horizontal axis labeled as **Quantity of Output**. - The orange line for **Aggregate Supply**. - The blue line for **Aggregate Demand**.- The key difference from Graph A is the position of the lines and the equilibrium point, which suggests different economic conditions.#### Analysis and Questions**Question:**Which of the graphs represents the state of the economy before this pronouncement?- [ ] Graph A- [ ] Graph B**Question:**True or False: President Roosevelt was trying to decrease aggregate supply.- [ ] True- [ ] False**Guiding Concepts:**- **Aggregate Demand (AD)** refers to the total demand for goods and services within the economy.- **Aggregate Supply (AS)** refers to the total supply of goods and services that firms in a national economy plan on selling during a specific time period.- Economic policies and pronouncements can shift these curves, leading to changes in equilibrium price levels and output quantities.Instructors often use these graphs to illustrate the impact of policy decisions on the economy's overall supply and demand, helping students understand the dynamic nature of economic equilibrium.

The Great Depression was an enormous monetary issue in light of the fact that the economy entered a…

In 1939, with the U.S. economy not yet fully recovered from the Great Depression, President Roosevelt proclaimed that Thanksgiving would fall a week earlier than usual so that the shopping period before Christmas would be longer. Graph A Graph B LRAS Aggregate Supply Aggregate Demand Price Level LRAS Quantity of Output Price Level 4 Aggregate Supply Aggregate Demand Quantity of Output

In 1939, with the U.S. economy not yet fully recovered from the Great Depression, President Roosevelt proclaimed that Thanksgiving would fall a week earlier than usual so that the shopping period before Christmas would be longer. Graph A Graph B LRAS Aggregate Supply Aggregate Demand Price Level LRAS Quantity of Output Price Level 4 Aggregate Supply Aggregate Demand Quantity of Output

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

### Great Depression

In 1939, with the U.S. economy not yet fully recovered from the Great Depression, President Roosevelt proclaimed that Thanksgiving would fall a week earlier than usual so that the shopping period before Christmas would be longer.

#### Economic Graphs: Aggregate Supply and Demand

###### Graph A

Graph A illustrates the Long-Run Aggregate Supply (LRAS), Aggregate Supply, and Aggregate Demand.
- The LRAS curve is represented by a vertical green line, indicating that in the long run, the quantity of output is not affected by the price level.
- The Aggregate Supply (AS) curve is represented by an upward-sloping orange line, indicating a positive relationship between the price level and the quantity of output supplied in the short run.
- The Aggregate Demand (AD) curve is represented by a downward-sloping blue line, indicating a negative relationship between the price level and the quantity of output demanded.
- The intersection of the three lines suggests an equilibrium point where the quantity of output and the price level are determined in both the short run and the long run.

###### Graph B

Graph B shows a similar illustration but with a shifted Aggregate Demand curve.
- The LRAS curve remains the same as a vertical green line.
- The Aggregate Supply (AS) curve remains an upward-sloping orange line.
- The Aggregate Demand (AD) curve in this graph has shifted to the right, which may result from an external factor such as increased consumer spending or policy changes.
- The new intersection point indicates a higher quantity of output at a potentially higher price level compared to Graph A. This suggests an increase in economic activity and overall demand within the economy.

These graphs are useful in understanding the impacts of policy changes on the economy, such as President Roosevelt's decision to move Thanksgiving, which aimed to stimulate economic activity during the Great Depression.

### Understanding Economic Conditions and Policies

#### Graphical Representations of Economic States

In the two provided graphs, we observe different scenarios of the relationship between aggregate demand and aggregate supply in an economy.

**Graph A:**
- The vertical axis represents the **Price Level**.
- The horizontal axis represents the **Quantity of Output**.
- There are two intersecting lines:
- The orange line represents **Aggregate Supply**.
- The blue line represents **Aggregate Demand**.
- The point where these lines intersect reflects the equilibrium in the economy, indicating the balance between supply and demand at a specific price level and output quantity.

**Graph B:**
- Similar to Graph A, this graph has:
- The vertical axis labeled as **Price Level**.
- The horizontal axis labeled as **Quantity of Output**.
- The orange line for **Aggregate Supply**.
- The blue line for **Aggregate Demand**.
- The key difference from Graph A is the position of the lines and the equilibrium point, which suggests different economic conditions.

#### Analysis and Questions

**Question:**
Which of the graphs represents the state of the economy before this pronouncement?

- [ ] Graph A
- [ ] Graph B

**Question:**
True or False: President Roosevelt was trying to decrease aggregate supply.

- [ ] True
- [ ] False

**Guiding Concepts:**
- **Aggregate Demand (AD)** refers to the total demand for goods and services within the economy.
- **Aggregate Supply (AS)** refers to the total supply of goods and services that firms in a national economy plan on selling during a specific time period.
- Economic policies and pronouncements can shift these curves, leading to changes in equilibrium price levels and output quantities.

Instructors often use these graphs to illustrate the impact of policy decisions on the economy's overall supply and demand, helping students understand the dynamic nature of economic equilibrium.

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1. Key facts about economic fluctuations The graph included below approximates United States business cycles between quarter one of 1947 and quarter three of 1951. The shaded region denotes periods of six or more consecutive months of declining real gross domestic product (real GDP), REAL GDP (Billions of dollars) 2170 2070 1970 1870 1770 1948 1949 YEAR 1950 1951 Source: "Current-dollar and Real GDP," Bureau of Economics Analysis, last modified May 1, 13, accessed May 15, 13, http://www.bea.gov/national/xis/gdplex.xs
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