onIndicate whether the following factor will affect aggregate demand (AD) or aggregate supply(AS) and whether the effect would be an increase or a decrease. Then indicate what willhappen to the price level and the level of Real GDP and what type of equilibrium will resultassuming that the economy is initially in long-run equilibrium.a) Adecrease inthe nominalwage rate.b) Adecrease inexports.c) Adecrease intheexchangerate.d) Thediscovery ofvast new oilfield inADno effectdecrease +increaseno effectASincreaseno effectincreaseincrease<<«>decreasedecreasedecrease<>Real GDPincreasedecreaseincreaseincreaseEquilibriumrecessionary gap ⇒inflationary gapinflationary gapinflationary gapAP?QFir

The objective of the question is to understand the impact of various factors on aggregate demand…

Answered: on Indicate whether the following…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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How does the increase in U.S energy production and the subsequent reduction in the reliance on imported oil affect the U.S Aggregate demand and/or short run aggregate supply curve(s) ? Examine the potential impact on real GDP and the average price level in the U.S.
Which statements accurately explain the slope of the aggregate-demand curve? (choose all statements that are correct) O The Canadian exchange rate depreciates, so Americans import more wheat from Canada U with a sharp increase in the consumer price Index, there is a surge in demand for durable goods before their prices rise even furt O A rise in the rate of interest on Ahmed's saving account makes him feel wealthier so he invests in a new office computer O When the Euro appreciates against the Canadian dollar, Canadians shift some of their demand for services to imports from Europe O When interest rates fall, Jennifer decides to buy some new farm equipment O with prices down and wages fixed by contract, Rocky's gravel pit decides to lay off workers OJake feels wealthier because of the price drop, so he decides to buy a new pick-up truck
Some advocates have suggested that the United States should move to a universal health care plan paid for at the federal level, like Medicare, which would be funded out of general tax revenues. Such a plan, it is argued, would guarantee quality health care to all. Ignoring all the controversy surrounding such a plan, how would the introduction of universal health care paid for from tax revenues impact short-run aggregate supply? On long-run aggregate supply?
Suppose that in 2011, the price of cotton, an input good, decreases in Microtania. Show how this event will change equilibrium output and price level by shifting either the SRAS or AD curve, and then answer the questions below. Did equilibrium output increase or decrease?Increase/Decrease Did equilibrium price increase or decrease?Increase/Decrease
other things equal, which of the following would be expected to shift aggregate demand to the right? 1. A decrease in the price level 2. Many of our major trading partners experience a recession 3. A decline in business confidence about future growth 4. an increase in home values.
Which of the following would cause a leftward shift of the aggregate demand curve? a decrease in tax rates an expectation of higher national income the economy of a trading partner enjoys a high rate of economic growth an appreciation of the U.S. dollar O a decrease in interest rates
Define aggregate supply? Build your argument by drawing Short-run aggregate supply curve. And what factors will leads to a vertical Long-run aggregate supply curve?
Assuming Aggregate Demand and Aggregate Supply are initially at ADo and ASo respectively, which of the following explains the adjustment towards long-run equilibrium depicted in Figure B? a. Unemployment (resulting from the short-run equilibrium being below LRAS) causes wages to decline, which increases AS till long-run equilibrium is attained at full employment level of income and a lower price level. b. Government spending is increased, increasing AD to a level sufficient to attain long-run equilibrium at full employment level of income and a higher price level c. In attempting to produce beyond the economy's natural level of GDP, producers bid up wages and prices of other resources, causing the AS to decrease to the point where long-run equilibrium is restored. d. Taxes are increased reducing AD to a level consistent with long-run equilibrium
q. Consider the following scenarios and briefly explain how each scenario would affect short-run aggregate supply (SAS), long-run aggregate supply (LAS) or aggregate demand (AD) in Canada. In some situations, more than one may be affected. 1. Canada produces larger number of university graduates who possess higher levels of education and skill. 2. Depletion of resources cause increase in the prices of key inputs in production. 3. Canada’s trading partners experience higher rates of economic growth. 4. Increase in oil prices raises the value of Canadian dollar.
If Australia, which imports goods from the United States, went into recession, we should expect that U.S. net exports would fall, making the aggregate demand shift right. fall, making the aggregate demand shift left. rise, making the aggregate demand shift right. rise, making the aggregate demand shift left.
Suppose that the economy of Monaco is represented by the aggregate demand (AD), short-run aggregate supply (SRAS), and long-run aggregate supply (LRAS) curves in the accompanying graph. a. Based on the graph, Monaco is experiencing a deflationary gap. currently at long-run equilibrium. experiencing an inflationary gap. b. Which of the following policies eliminate this phenomenon? A birth control subsidy An increase government purchases of goods and services An increase in taxes An increase in government transfers A cut in taxes c Suppose that the government implements the policy proposed in part b. Shift the aggregate demand curve on the graph accordingly. Aggregate price level LRAS 7 6 X 5 4 3 AD 2 3 10 9 8 2 1 0 0 1 4 5 6 Real GDP 7 8 SRAS 9 10

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