Prie ee AD AD Heal GDP FIGURE 23-4 Refer to Figure 23-4. Suppose the Canadian economy is initially in equilibrium at point A. An unexpected shock then shifts both the AD and the AS curves as shown and results in a now equilibrium represented by point B. Which of the following events could cause such a shock? Select one: O A. a decrease in the worlid price of oil O B. an increase in the net tax rate O C. an increase in factor prices O D. a decrease in firms' desired investment expenditures our productivity
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- For each of the three theories for the upward slopeof the short-run aggregate-supply curve, carefullyexplain the following:a. how the economy recovers from a recession andreturns to its long-run equilibrium without anypolicy interventionb. what determines the speed of that recoveryExplain whether each of the following events shiftsthe short-run aggregate-supply curve, the aggregatedemand curve, both, or neither. For each event thatdoes shift a curve, draw a diagram to illustrate theeffect on the economy.a. Households decide to save a larger share of theirincome.b. Florida orange groves suffer a prolonged period ofbelow-freezing temperatures.c. Increased job opportunities overseas cause manypeople to leave the country.3. The graph below shows the AD-AS model for the US in long-run equilibrium. Label both axes and the following: AD, SRAS, LRAS. Indicate the equilibrium price level is P, and equilibrium level of output is Yo. X Assume that due to an expansion in European economics, US exports to that region increase. A. Show the effects of this change in the graph above. B. What happens to the SR equilibrium price level and level of output (Real GDP)? Label these P₁ and Y₁. C. Initially, what happens to real wages? D. What happens to the unemployment rate? E. Given your answer to parts C and D, how might workers respond? F. Show the effects of the change described in part E in the graph above. Label the new equilibrium price level and level of output as P₂ and Y₂. G. After this transition to the LR equilibrium, what is the level of output (Y₂) as compared to the initial level (Yo)?
- 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.Illustrate and interpretthe short-run and longrun effects of temporary and permanentsupply shocksShipping costs have increased dramatically in the past few months. This is a and tends to O negative supply shock, increase prices O positive supply shock, increase prices O negative demand shock, increase prices O positive supply shock, decrease prices
- P4 AS2 AS, Aggregate output Y Figure 11.3 Refer to Figure 11.3. Hurricane Katrina destroyed a large portion of the infrastructure along the Gulf of Mexico coast. This caused Select one: a. the short-run aggregate supply curve to shift from AS 1 to AS 0- b. the short-run aggregate supply curve to shift from AS 1 to AS 2. c. the economy to move from Point C to Point B along AS 1. d. the economy to move from Point B to Point A along AS 1. Price levelWhich of the following statements about the economy's aggregate demand curve is not correct? O The intersection of the AD curve and the SAS curve determines the short-run Macroeconomic equilibrium. All points on the AD curve relate a particular price level to the total demand for output at that price level. OA change in the price level will shift the AD curve. O The AD curve will be shifted by AD shocks.What effects would each of the following have on aggregate demandor aggregate supply, other things equal? In each case explain the expectedeffects on the equilibrium price level and the level of real output, assumingthat the price level is flexible both upward and downward.· A sizable increase in labor productivity (with no change innominal wages).· An increase in exports that exceeds an increase in imports (notdue to tariffs).
- Which of these is a negative effect of increasing price levels? a. Increases the real value of money O b. Encourages higher consumption O c. Shifts aggregate demand outward O d. moves aggregate demand downwardWhat effects would each of the following have on aggregate demandor aggregate supply, other things equal? In each case explain the expectedeffects on the equilibrium price level and the level of real output, assumingthat the price level is flexible both upward and downward. · A reduction in interest rates at each price level.· A major increase in spending for health care by the Federalgovernment.· A 10 percent across-the-board reduction in personal income taxrates.· A sizable increase in labor productivity (with no change innominal wages).· An increase in exports that exceeds an increase in imports (notdue to tariffs).A Moving to another question will save this response. Quèstion 25 AS2 AS AS3 e3 P3 AD Q2 Q, Q3 Real Domestic Output Refer to the graph. If aggregate supply shifts from AS1 to AS2, what will happen to price level and real domestic output? 4 For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac). Paragraph ニv A 12pt Open Sans,sa... v BIUS Price Level !!!