Long run aggregate supply is vertical, while short run AS is not because:in the short run, prices cannot change as quickly as they shouldin the long run, prices are constantin the long run, prices catch up to wage increasesO in the long run, increases in prices are matched by increases in wages

Aggregate supply refers to the overall quantity of the goods and service that an economy produced in…

Long run aggregate supply is vertical, while short run AS is not because: O in the short run, prices cannot change as quickly as they should O in the long run, prices are constant in the long run, prices catch up to wage increases in the long run, increases in prices are matched by increases in wages

Long run aggregate supply is vertical, while short run AS is not because: O in the short run, prices cannot change as quickly as they should O in the long run, prices are constant in the long run, prices catch up to wage increases in the long run, increases in prices are matched by increases in wages

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Which is NOT neutral in the long run? O output O aggregate demand O money real interest rates
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Recall the Aggregate Demand and Aggregate Supply model, in the short-run, a reduction in businesses' costs of production make output rise and prices fall. O output fall and prices rise. O output and prices fall. output and prices rise.
Suppose now the government passes a law that reduces unemployment benefits in a way that causes unemployed workers to seek out new jobs more quickly. This change in policy will cause the natural rate of unemployment to fall ▼ which will: O Not impact the long-run aggregate supply curve O Shift the long-run aggregate supply curve to the left O Shift the long-run aggregate supply curve to the right Complete the following table by determining how each event impacts the position of the long-run aggregate supply (LRAS) curve. An investment tax credit increases the rate at which firms acquire machinery and equipment. Many workers leave to pursue more lucrative careers in foreign economies. For environmental and safety reasons, the government requires that the country's nuclear power plants be permanently shut down. Direction of LRAS Curve Shift No shift ▼ No shift Right
How do prices change due to an economic contraction that is caused by a shift in aggregate demand? O a. They rise in the short run and fall back to their original level in the long run. b. They fall in the short run and fall even more in the long run. c. They rise in the short run and rise even more in the long run. d. They fall in the short run and rise back to their original level in the long run.
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Assume an ecomy operates in the intermediate range of its aggregate supply curve. State the direction of shif for the aggregate demand curve or aggregate supply curve for each of the following changes in conditions. What is the effect on the price level? On real GDP? On employment?