Price Level Long-run AS Y, Y, Short-run AS AD Quantity of Real Output Suppose the economy is operating in a recession such as point B in the graph. If policymakers allow the economy to adjust to the long-run natural level on its own O a. people will reduce their price expectations and aggregate demand will shift right O b. people will reduce their price expectations and the short-run aggregate supply will shift right Opeople will raise their price expectations and the short-run aggregate supply will shift left Od people will raise their price expectations and aggregate demand will shift left

Price Level Long-run AS Y, Y, Short-run AS AD Quantity of Real Output Suppose the economy is operating in a recession such as point B in the graph. If policymakers allow the economy to adjust to the long-run natural level on its own O a. people will reduce their price expectations and aggregate demand will shift right O b. people will reduce their price expectations and the short-run aggregate supply will shift right Opeople will raise their price expectations and the short-run aggregate supply will shift left Od people will raise their price expectations and aggregate demand will shift left

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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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
explain the likely effects of U.S boom on the demand for canadian exports.what woukd be the effect of canadian aggregate demand?suppose the bank of canada viewed its monetary policy as being appropriate for keeping gdp of canada close to potential gdp . what would you hen predict to be the central bank's response to foriegn boom in U.S
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.
Refer to the information provided in the figure at right to answer the question that follows. The level of aggregate output that can be sustained in the long run without inflation O A. is $400 million. B. is $700 million. O C. is $800 million. O D. cannot be determined from this information because aggregate demand is not given. Price level, P LRAS AS :800 400 700 Aggregate output (income), Y ($ million)
Refer to the graph to the right. The shift from AS, to AS, shown in the diagram is referred to as AS, AS, a(n) O A. decrease in unit costs. O B. negative aggregate supply shock. O. positive aggregate supply shock. OD. increase in unit costs. Real GDP Price Level
PRICE LEVEL O a. C to D. Ob. D to C. Oc.B to A Od. A to B. D LRAS O B AD QUANTITY OF OUTPUT SRAS, SRAS AD Refer to Figure 34-2. If the economy is in long-run equilibrium, then an adverse shift in short-run aggregate supply would move the economy from
How do fluctuations in aggregate demand and short-run aggregate supply bring fluctuations in real GDP around potential GDP? Starting from a full-employment equilibrium, a decrease in aggregate demand and creates gap. O A. increases real GDP above potential GDP; an inflationary OB. decreases real GDP below potential GDP; an inflationary OC. increases real GDP above potential; a recessionary O D. decreases real GDP below potential GDP; a recessionary _, short-run aggregate , and the economy returns to a full-employment In the long run, the money wage rate supply equilibrium. O A. rises; increases B. falls; decreases C. rises; decreases D. falls; increases
170 Price 140 level 120 100 D AD5 AD4 AD 3 AD, AD2 3.0 4.0 5.0 6.0 7.0 8.0 Real GDP In Exhibit 20-8, if aggregate demand shifts from AD₁ to AD3, O a. real GDP will increase from $3.0 to $4.0, and the price level will increase from 100 to 140. Ob. real GDP will increase from $3.0 to $7.0, and the price level will increase from 100 to 120. Oc. real GDP will increase from $3.0 to $7.0, and the price level will increase from 100 to 140. Od. real GDP will increase from $3.0 to $4.0, and the price level does not change.
How would I do c and d?
According to the basic AS-AD model with a horizontal AS curve, high inflation and recession can occur in the short-run at the same time when there is: O b. an adverse supply shock with a decrease in aggregate demand. O C. a favorable supply shock with a decrease in aggregate demand. O d. a favorable supply shock without a change in aggregate demand. an adverse supply shock without a change in aggregate demand.
A constant inflation rate is shown with aggregate demand shifting rightward O A. faster than the aggregate supply shifts leftward. B. at the same rate as the aggregate supply shifts rightward. C. faster than the aggregate supply shifts rightward. D. with no shifts in aggregate supply. O E. at the same rate as the aggregate supply shifts leftward.
Figure 6 PRICE LEVEL LRAS Y, Y₂ QUANTITY OF OUTPUT SRAS; SRAS, AD 15. Refer to Figure 6. Starting from point A and assuming that aggregate demand is held constant, in the long run the economy is likely to experience a a. falling price level and a falling level of output, as the economy moves to point C. b. rising price level and a falling level of output, as the economy moves to point B. c. falling price level and a rising level of output, as the economy moves to point B. d. rising price level and a rising level of output, as the economy moves to point C.