Price Level 10. Problems and Applications Q10 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. LRAS Quantity of Output Aggregate Supply Aggregate Demand Aggregate Demand Aggregate Supply LRAS ? Which of the following reasons could explain why the aggregate quantity of output supplied changes? Check all that apply. Prices are sticky. People have misperceptions about the price level. The price level has fallen. Wages are not sticky. On the preceding graph, show what happens to the short-run aggregate-supply curve in the long run. (Note: For now, assume there is no change in the long-run aggregate-supply curve.) The aggregate quantity of output demanded between the short run and the long run because the price level The decline in investment spending might cause the long-run aggregate-supply curve to shift to the decreases productivity and output in the future. if it results in a smaller capital stock that
Price Level 10. Problems and Applications Q10 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. LRAS Quantity of Output Aggregate Supply Aggregate Demand Aggregate Demand Aggregate Supply LRAS ? Which of the following reasons could explain why the aggregate quantity of output supplied changes? Check all that apply. Prices are sticky. People have misperceptions about the price level. The price level has fallen. Wages are not sticky. On the preceding graph, show what happens to the short-run aggregate-supply curve in the long run. (Note: For now, assume there is no change in the long-run aggregate-supply curve.) The aggregate quantity of output demanded between the short run and the long run because the price level The decline in investment spending might cause the long-run aggregate-supply curve to shift to the decreases productivity and output in the future. if it results in a smaller capital stock that
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Transcribed Image Text:Price Level
10. Problems and Applications Q10
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.
LRAS
Quantity of Output
Aggregate Supply
Aggregate Demand
Aggregate Demand
Aggregate Supply
LRAS
?
Transcribed Image Text:Which of the following reasons could explain why the aggregate quantity of output supplied changes? Check all that apply.
Prices are sticky.
People have misperceptions about the price level.
The price level has fallen.
Wages are not sticky.
On the preceding graph, show what happens to the short-run aggregate-supply curve in the long run. (Note: For now, assume there is no change in
the long-run aggregate-supply curve.)
The aggregate quantity of output demanded
between the short run and the long run because the price level
The decline in investment spending might cause the long-run aggregate-supply curve to shift to the
decreases productivity and output in the future.
if it results in a smaller capital stock that
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