In the long run, an increase in AD will result in: no change in the aggregate price level. increases in both the aggregate price level and the aggregate output level. В. increase in the aggregate output level. C. an increase in the aggregate price level but no change in the aggregate output level. D. A.
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- 6.02 AS-AD Model Situation Which curve shifts? Which direction? Price Level and Output Increase or Decrease Recessionary or Inflationary (Will the situation cause a recession or inflation?) The cost of oil rises sharply AS to the left Price level increases Output decreases Recessionary 1. The Government increases spending sharply on infrastructure 2. American goods increase in demand from foreign buyers 3. Immigration into the country increases dramatically 4. Interest rates decrease 5. A technological breakthrough makes companies more productive 6. The government increases regulations on greenhouse gas emissions 7. The government increases subsidies in all sectors of the economy 8. With renewed confidence consumers increase spending for ChristmasWhich of the following would NOT cause a shift in AD? Select one: a. A reduction in interest rates b. A fall in the cost of production c. A reduction in income tax d. An increase in government spendingAggregate Demand and Aggregate Supply (AD-AS) Model (Chapter 13) 5.1 Why does the short-run aggregate supply curve slope upward? 5.2 Explain why the long-run aggregate supply curve is vertical. Then, explain how each of the following events would affect the long-run aggregate supply curve. A lower price levels b. A decrease in the labor force A decrease in the quantity of capital goods d. Technological change a. с. 5.3. Starting from long-run equilibrium, use the basic aggregate demand and aggregate supply diagram to show what happens in both the long run and the short run when there is a decline in wealth. Explain how the economy moves back to full employment.
- An increase in the GDP price level will: Multiple Choice O decrease aggregate demand increase aggregate demand. Increase the quantity of real domestic output demanded. decrease the quantity of real domestic output demanded. Dani 38 of 47 Next >The graph below shows the AD-AS diagram for the US. Suppose that the economy is initially in long-run equilibrium with the price level of 700 (Red AD and SRAS curves). Now suppose that dollar depreciates. Price Level 1200 1100- 1000 900 800 700- 600* 500 400- 300- 200- 100 HITTE 100 200 300 400 500 Real GDP As a result of this event what is the new short-run price level? 600 700 800 900 1000 1100 120 QMalaysia GDP to rebound up to 7.5% in 2021, central bank predicts The Malaysian economy is expected to grow between 6% and 7.5% this year, the central bank said on Wednesday, with COVID-19 vaccinations and stronger external demand driving a recovery from the 5.6% contraction for 2020. Central bank Governor Nor Shamsiah Yunus said growth this year would also be underpinned by higher private and public expenditures, while an accelerating immunization campaign will improve confidence. "The Malaysian economy is projected to rebound in 2021, with the gross domestic product achieving pre-COVID-19 levels by mid-2021,". The new full-year estimate leaves slightly more room at the low end, compared with a previous forecast of 6.5% to 7.5% expansion. "In our forecast, we assume that herd immunity will only be achieved in the first quarter of 2022," Nor Shamsiah explained. She also said the bank considered that Malaysia's international borders could remain largely closed for the entire year, but…
- How is the AD/SRAS/LRAS diagram affected when nominal wages rise while productivity stays the same? (aggregate demand, short run and long run aggregate supply) O Long-run Aggregate Supply (LRAS) shifts to the left. Short-run Aggregate Supply (SRAS) shifts to the left. Aggregate demand shifts to the left.In the short run, what is the impact on the price level and the level of real GDP of each of the following changes. Analyze graphically and explain. a) a decrease in the cost of a non labor input, such as oil or electricity. b) a decrease in interest rates in the U.S.(relatively to interest rates abroad) c) a decrease in the value of the U.S. dollar(dollar depreciates)According to the two graphs, a decrease in the aggregate price level would cause a shift from: a. A to B b. B to C c. C to B (WRONG ANSWER) d. A to C
- Consider the following AD-AS graph of country H. Price level (P) LL OF; E OF; A O B; C O B; A OB; E F LRAS E A D B SRAS3 AD₁ SRAS₁ SRAS2 AD2 Real GDP (Y) Country H is currently at point A. Consumer confidence increases and households increase consumption, then in the short run country H will move to point and in the long to pointThere is a decrease in AD. Show on one AD/AS diagram the effect on output and prices in both the short-run and the long-run. Mark the starting price and output P₁ and QN. Mark the price and output at the end of the short-run P2 and Q2. Mark the price and output at the end of the long-run P3 and Q3. Be sure to label all the lines on your diagram, and if a line shifts, mark the order of the shifts with subscript numbers after the symbols (for example AD₁ shifts to become AD₂). Next to the diagram, state the effect on prices, output, unemployment, and wages in both the short-run and long-run. Assume we start at QN.3. The graph below shows the AD-AS model for the US in long-run equilibrium. Label both axes and the following: AD, SRAS, LRAS. Indicate the equilibrium price level is P, and equilibrium level of output is Yo. X Assume that due to an expansion in European economics, US exports to that region increase. A. Show the effects of this change in the graph above. B. What happens to the SR equilibrium price level and level of output (Real GDP)? Label these P₁ and Y₁. C. Initially, what happens to real wages? D. What happens to the unemployment rate? E. Given your answer to parts C and D, how might workers respond? F. Show the effects of the change described in part E in the graph above. Label the new equilibrium price level and level of output as P₂ and Y₂. G. After this transition to the LR equilibrium, what is the level of output (Y₂) as compared to the initial level (Yo)?