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Refer to the setup of the previous question. Start from full employment equilibrium. If the money supply (M) were increased, then it would
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- 1. Consider an economy in long-run equilibrium at P1,Y*. Demand for money decreases. What will be the new long-run equilibrium? Group of answer choices Price will be higher than P1 and output will be equal to the natural output. Price will be higher than P1 and output will be smaller than the natural output. 2.What should be the optimal policy response to a negative demand shock according to a neoclassical economist? Group of answer choices The government should lower the interest rate to shift the AD to the right The central bank should enact an expansionary monetary policy to move back the AD to the initial position The government should lower wages to accommodate the adjustment of the AS curve None. The economy will self adjust and there is no need of intervention. Price will be higher than P1 and output will be higher than the natural output. Price will be lower than P1 and output will be equal to the natural output.Complete the sentences with the correct term. Some options can be used more than once, and some may not be used at all. For the blanks use the answer bank. Cost‑push inflation occurs when decreases until equilibrium output falls below the full employment level.As a result, the increases. One possible cause of cost‑push inflation is an increase in . To combat falling aggregate output, the government may introduce policies to increase to where it and short‑run aggregate supply intersect at the same point.These policies cause to return to its full employment level,and the increases even further.Suppose the full-employment level of real output (Q for a hypothetical economy is $250 and the price level (P) initially is 100. Use the short-run aggregate supply schedules below to answer the questions that follow. AS (P - 100) AS (P - 125) AS (P - 75) P Q P P 125 $ 280 125 $ 250 125 $ 310 100 250 100 220 100 280 75 220 75 190 75 250 Instructions: Enter your answers as a whole number. a. What is the level of real output in the short run if the price level unexpectedly rises from 100 to 125 because of an increase in aggregate demand? What happens if the price level unexpectedly falls from 100 to 75 because of a decrease in aggregate demand? b. What is the level of real output in the long run when the price level rises from 100 to 125? When the price level falls from 100 to 75?
- Give me all answers I'll give you a Upvot? 1)Use the Keynesian cross diagram to analyze the effects of the following on real output. (a) Decrease in government purchases (b) Increase in housing prices (c) Increase in taxes (d) Decrease in stock pricesThe long-run aggregate supply curve shifts right if Answer immigration from abroad increases. the capital stock increases. technology advances. All of the above are correct.For example, an increase in the money supply,(NORMINAL, REAL) a variable, will cause the price level, a (NORMINAL, REAL) variable, to increase but will have no long-run effect on the quantity of goods and services the economy can produce, a (REAL, NORMINAL) variable. The notion that an increase in the quantity of money will impact the price level but not the output level is known as (MONETARY, THE QUANITY, PRICE) .
- Choose the correct match of each of the following economic concepts: A Unemployment caused by a decrease in the demand for some goods and services B The equilibrium point is to the left of the full employment point graphically C The inverse of the marginal propensity to consume (MPC) D Total Leakages exceeds Total Injections The Multiplier The equilibrium point is the same as the full employment point graphically E v National income equilibrium E Total Injections exceeds Total Leakages Ev Inflationary Gap G The equilibrium point is to the right of the full employment point graphically Structural Unemployment | Increases with the increase in the marginal propensity to save (MPS) |Unemployment resulting when workers change their jobs |Increases with the increase in the marginal propensity to consume (MPC) K Total Leakages equals Total Injections Unemployment that appears during the downturn of the business cycle A Moving to another question will save this response. « < Question 16 ch…A recessionary gap exists when the macro economy is in equilibrium at less than the potential output of the the economy because aggregate demand is insufficient to fully employ all of society' s resources. In other words, the equilibrium (AD = AS) occurs to the left of the vertical long-run supply curve. At this point, potential output is reached ( full employment) and if any unemployment occurs, then it is due to structural or frictional; that is, the economy is at its natural rate of employment. True or falsesWhat happens when firms and workers underestimate future prices in the economy? Focus your answer on what would happen to actual output as opposed to the expected potential output. (Course is macroeconomics).
- In the economy depicted in the graph, what happens if there is no intervention from policy makers? Use the graph, where LRAS represents long-run aggregate supply, SRAS represents short-run aggregate supply, and AD represents aggregate demand, to demonstrate the answers by shifting the appropriate curve or curves. Prices will decrease. increase. Output will decrease. increase. Aggregate price level (P) LRAS Real output (Q) SRAS ADIf a graph showed aggregate demand and short-run aggregate supply intersecting at $18 trillion of GDP, and the long-run aggregate supply curve was situated at $20 trillion of GDP, this would indicate that the economy was Select one: a. at full employment. b. experiencing high inflation. c. in a recession. d. in an expansion.Suppose the Fed doubles the growth rate of the quantity of money in the economy. In the long run, the increase in money growth will change which of the following? Check all that apply. The inflation rate C The price level C The level of technological knowledge The size of the labor force Suppose the economy produces real GDP of $70 billion when unemployment is at its natural rate. Use the purple points (diamond symbol) to plot the economy's long-run aggregate supply (LRAS) curve on the graph. 132 128 LRAS 124 120 116 112 108 104 100 10 20 30 40 50 60 70 80 OUTPUT (Billions of dollars) Suppose the government passes a law that significantly increases the minimum wage. The policy will cause the natural rate of unemployment to which will: O Shift the long-run aggregate supply curve to the right O Shift the long-run aggregate supply curve to the left O Not affect the long-run aggregate supply curve PRICE LEVEL
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