Price Level 3. QUESTION 23 AS P2 AD Real GDP FIGURE 24-2 Refer to Figure 24-2. If the economy is currently in a short-run equilibrium at Y 1, the economy is experiencing O a longrun equilibrium. O a recessionary output gap. O an inflationary output gap. O potential output growth. O an excesS supply of labour.

Price Level 3. QUESTION 23 AS P2 AD Real GDP FIGURE 24-2 Refer to Figure 24-2. If the economy is currently in a short-run equilibrium at Y 1, the economy is experiencing O a longrun equilibrium. O a recessionary output gap. O an inflationary output gap. O potential output growth. O an excesS supply of labour.

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter11: Managing Aggregate Demand: Fiscal Policy

Section: Chapter Questions

Problem 2TY

See similar textbooks

Similar questions

S Which of the following is true of a recessionary gap? O a. In the long run, this gap closes when the aggregate demand curve shifts rightward. b. It measures the amount by which actual output is greater than an economy's potential output. O c. It develops when the expected price level is less than the actual price level. O d. In the long run, this gap closes when resource suppliers negotiate lower resource payments. Oe. In the long run, this gap closes when the short-run aggregate supply curve shifts leftward. prt sc oooo O Icon Key II 1 FB
Figure 11.2 shows the relationship between the price level and real GDP. Which of the following is the long-run equilibrium point? Figure 11.2 Price level O * O O e 52 V P₁ P₂ P3 0 A point between e* and e" Potential output LRAS e Q3 Q₂ Q₁ SRAS AD AD* AD' Real GDP (trillions of dollars)
Price level Figure 10-7 LRAS SRAS₂ SRASO J H SRAS ADO Real GDP Refer to Figure 10-7. Starting from long-run equilibrium at point F, at which of the following points would short-run equilibrium occur following a drought in the Midwestern states? O al O b. F OC.G O d.H
Short-run macroeconomic equilibrium is when (Hint: Be careful! Be sure to return to the general definition of equilibrium): Firms have no incentive to change how much they produce O Households have bought as much as they want O Spending is equal to consumption (AE = C) O The government is content with the level of employment
11
Exhibit 14A-2 Macro AD-AS Model Price Level CPI 130 120 110 100 90 O J T 1 1 1 17 1 1. 1 IN F I 1 1 9.0 1 N 1 LRAS 1 SRAS AD LL 9.5 10.0 10.5 11.0 11.5 Real GDP (trillions of dollars per year) In Exhibit 14A-2, the intersection of AD with SRAS indicates: O a short-run equilibrium. O a long-run equilibrium. O that the economy needs policies to reduce unemployment. O that the economy is at full employment.
Consider the following (partially labelled) income-expenditure diagram. Y* If Y* indicates potential output and the economy is equilibrium, which of the following statements must be true? Select one: O a. The rate of cyclical unemployment is positive. O b. There is an unplanned fall in business inventories. O c. Real GDP will increase until Y* = Y. d. There is an expansionary output gap. O e. PAE will automatically fall until Y = Y*.
Consumer Spending increased by 5% last month. Based on this data, which of the following will likely occur in the next 3 -6 months? O GDP will increase O Unemployment will increase O The economy will enter a trough O Stagflation will occur
i will 10 upvotes urgent
Assume an economy operates in the intermediaterange of its aggregate supply curve. State thedirection of shift for the aggregate demandor aggregate supply curve for each of thefollowing changes in conditions. What is theeffect on the price level? On real GDP? Onemployment?a. The price of crude oil rises significantly.b. Spending on national defense doubles.c. The costs of imported goods increase.d. An improvement in technology raises laborproductivity.
The economy has shifted and the quantity of the real GDP supplied has increased. What has potentially happened to aggregate price levels? Potentially the price levels have increased to a higher aggregate price level and if the wages are sticky, businesses have hired more employees as labor has become cheaper. O Potentially the price levels have decreased to a lower aggregate price level and if the wages are sticky, businesses have hired more employees as labor has become cheaper. Potentially the price levels have increased to a higher aggregate price level and if the wages are sticky, businesses have fired some employees as labor has become too expensive.
economic