In a new initiative to promote exercise, the Australian government spends a lot of money building and renovating parks around the country. The economy was initially in long-run equilibrium. In the short run, the aggregate demand curve shifts right. In the long run the price level decreases, output returns to its potential, and real wages increase. In the short run, the aggregate demand curve shifts right. In the long run, the price level increases, the output returns to its potential, and real wages increase. In the short run, the aggregate demand curve shifts right. In the long run, the price level increases, output returns to its potential, and real wages do not change.

In a new initiative to promote exercise, the Australian government spends a lot of money building and renovating parks around the country. The economy was initially in long-run equilibrium. In the short run, the aggregate demand curve shifts right. In the long run the price level decreases, output returns to its potential, and real wages increase. In the short run, the aggregate demand curve shifts right. In the long run, the price level increases, the output returns to its potential, and real wages increase. In the short run, the aggregate demand curve shifts right. In the long run, the price level increases, output returns to its potential, and real wages do not change.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

This problem continues from the previous one. On the graph the supply in the Rest of the World has shifted from Sstart to S2 and the market in the Rest of the World has moved to a new short run equilibrium at B. The price of Good A is P1 in the U.S. and P2 in the Rest of the World. Which answer choices are correct from the image bellow?
Suppose that President Clinton has recently recommended that the U.S. should use some of the strategic oil reserves (oil stored underground and owned by the United States government) in order to solve the U.S. oil supply problem. Assume that quantity demanded in the short-run is inelastic at 1 million barrels per day. The quantity supplied (per day) is equal to 700,000 + 10,000P (where P is the price for a barrel of oil). a. What would be the current price for a barrel of oil? N b. If Clinton releases 100,000 barrels per day, what is the new equilibrium price and quantity? N c. Presidential candidate George W. Bush proposed that all states lower their gasoline tax. Assume that the gasoline tax reduction leads to a $10 decrease in the tax on a barrel of oil (i.e., supply side). What is the new price and quantity? N How much of the tax savings will be passed on to consumer through lower prices? Assume that the changes in part b. have not occurred. d. What impact do each of these two…
What is wrong with the following diagram of the short-run effect of a fall in the price of oil? P SRAS2 SRAS1 P2 P1 AD Q2 Q1 a This is a diagram with price on the vertical axis and quantity on the horizontal axis. There is an AD curve that slopes down and an SRAS1 curve that slopes up. Where the two curves intersect, there is a P1 marked on the vertical axis and a Q1 marked on the horizontal axis. There is a curve labelled SRAS2 that slopes up and is to the left of the SRAS1 curve. Where this SRAS2 curve intersects the AD curve, there is a Q2 on the horizontal axis and a P2 on the vertical axis. Q2 is to left of Q1 and P2 is above P1. O Nothing. O Instead of the SRAS curve shifting, the AD curve should shift right. O The SRAS should shift right. O Instead of the SRAS curve shifting, the AD curve should shift left..
The graph above refers to a significant increase in individual income taxes, taking them to their highest level in 50 years. Which of the following is likely to result? a) macroeconomic supply will decrease in the short run b) the economy will experience lower economic growth c) inflationary pressures will be mild d) cyclical unemployment will decrease
Suppose firms become very pessimistic about future business conditions and significantly reduce investment spending. Show the short-run effect of this pessimism on the aggregate-demand curve. Price Level LRAS Aggregate Supply * Aggregate Demand Quantity of Output Aggregate Demand Aggregate Supply LRAS
Suppose there are 191 identical consumers interested in good X and the demand for X of person i is given by x₁ = 142-p/8 where p denotes the price of good X. Find the aggregate demand for good X and the inverse aggregate demand and enter below the slope of the inverse aggregate demand.
A ship gets stuck in the Suez Canal that shuts down shipping lanes. If we start in equilibrium, what happens? Aggregate demand to shift left. Short-run aggregate supply to shift right. Short-run aggregate supply to shift left. Aggregate demand to shift right.
Which of the following would cause the Aggregate Supply curve to move from AS to AS2 in the graph below? A) A general increase in energy and labor cost for businesses. B) A general decrease in labor cost for businesses. C) An increase in productivity. D) A federal government increase in spending.
Unlike the Suez Canal, the Panama Canal is highly relevant for the US economy. A blockage of the Panama Canal could produce severe supply disruptions for the US economy. Suppose there is a severe blockage of the Panama Canal that last for six weeks. The following questions consider how such a blockage of the Panama Canal would affect the US economy in the short-run. Once Panama Canal officials are able to unblock the canal and get traffic flowing again, the US economy will begin to recover from the supply disruptions. Which of the following statements describes the US economy after the Panama Canal has become unblocked? A) The price level will increase back to its initial level of P*, and real GDP will decrease back to its natural level. B) The price level will decrease back to its initial level of P*, and real GDP will increase to its natural level. C) The price level will increase to its original level of P*,…
Imagine that there are only two apple producers in Australia, Crispy and Crunchy. Crispy's supply curve is: p=2q and Crunchy's is: p=10+2q. a) Carefully draw the two individual supply curves b) Calculate the carefully graph the aggregate supply curve. If there is a kink, indicate its corresponding value of p and q c) Calculate the point elasticities of both individual supplies at the kink found in (b) (if there is one) or at the point where p=0
The U.S. macroeconomy is in a short-run equilibrium at Q1 and P1. What is going to happen in the long-run? P Р1 QN Q₁ SRAS1 AD Q This is a diagram with price on the vertical axis and quantity on the horizontal axis. There is a place marked on the horizontal axis with a QN. There is an upward sloping line labelled SRAS and a downward sloping line labelled AD. The place these two lines intersect is labelled Q1 on the horizontal axis and P1 on the vertical axis. Q1 is to the right of QN. O The aggregate demand curve will shift left leading to falling prices and falling output. O SRAS curve will shift left leading to rising output and rising prices. OSRAS curve will shift left leading to rising prices and falling output.
In 2006, the economy of Singsville had an aggregate demand and aggregate supply according to the following schedule:Price level Aggregate Demand Short-Run Aggregate Supply100 $1445 $1085110 $1380 $1140120 $1315 $1195130 $1250 $1250140 $1185 $1305150 $1120 $1360160 $1055 $1415 What was the equilibrium price level in Singsville in 2006?