Question 1 is reprinted for your convenience. 1. Assume that a country's economy is in long-run equilibrium. (a) Using a correctly labeled graph of aggregate demand, short-run aggregate supply, and long-run aggregate supply, show the short-run equilibrium price level, labeled PL, and output level, labeled Y1. (b) Assume that increased uncertainty has reduced business orders for equipment. What is the impact of the change in business orders on each of the following in the short run? (i) Aggregate demand. Explain. (ii) Employment (c) Based on the change in business orders, what will happen to the long-run economic growth rate? Explain. (d) Using a correctly labeled graph of the loanable funds market, show the effect of the change in business orders on the real interest rate in the country in the short run. (e) Given the effect on the real interest rate identified in part (d), what will happen to each of the following? (i) The supply of the country's currency on the foreign exchange market. Explain. (ii) The international value of the country's currency

Question 1 is reprinted for your convenience. 1. Assume that a country's economy is in long-run equilibrium. (a) Using a correctly labeled graph of aggregate demand, short-run aggregate supply, and long-run aggregate supply, show the short-run equilibrium price level, labeled PL, and output level, labeled Y1. (b) Assume that increased uncertainty has reduced business orders for equipment. What is the impact of the change in business orders on each of the following in the short run? (i) Aggregate demand. Explain. (ii) Employment (c) Based on the change in business orders, what will happen to the long-run economic growth rate? Explain. (d) Using a correctly labeled graph of the loanable funds market, show the effect of the change in business orders on the real interest rate in the country in the short run. (e) Given the effect on the real interest rate identified in part (d), what will happen to each of the following? (i) The supply of the country's currency on the foreign exchange market. Explain. (ii) The international value of the country's currency

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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