Refer to the information provided in Figure 26.1 below to answer the question(s) that follow. AS L000 1.300 Aggregate output (income) () (hillions of dollarn) Refer to Figure 26.1. This economy reaches capacity at Select one: a. $500 billion b. $1,500 billion c. an output level that is indeterminate from this information because aggregate demand is not given d. $1,000 billion Price level

Refer to the information provided in Figure 26.1 below to answer the question(s) that follow. AS L000 1.300 Aggregate output (income) () (hillions of dollarn) Refer to Figure 26.1. This economy reaches capacity at Select one: a. $500 billion b. $1,500 billion c. an output level that is indeterminate from this information because aggregate demand is not given d. $1,000 billion Price level

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Refer to the figure to answer two questions. Price Level (average price) PE E a. How much output is unsold at the price level P₁? OD-S OS-QE 05-D₁ OQE-Di OP₁ b. At what price level is all output produced sold? OP₁-PE O PE+ P1 OPE Aggregate supply D₁ QE S₁ Real Output (quantity per year) Aggregate demand
6. Why the aggregate supply curve slopes upward in the short run In the short run, the quantity of output that firms supply can deviate from the natural level of output if the actual price level in the economy deviates from the expected price level. Several theories explain how this might happen. For example, the sticky-price theory asserts that the output prices of some goods and services adjust slowly to changes in the price level. Suppose firms announce the prices for their products in advance, based on an expected price level of 100 for the coming year. Many of the firms sell their goods through catalogs and face high costs of reprinting if they change prices. The actual price level turns out to be 90. Faced with high menu costs, the firms that rely on catalog sales choose not to adjust their prices. Sales from catalogs will v , and firms that rely on catalogs will respond by v the quantity of output they supply. If enough firms face high costs of adjusting prices, the unexpected…
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Refer to the information provided in Figure below to answer the question that follow. 6. PA AS2 AS ASo Aggregate output Refer to Figure A decrease in aggregate supply is represented by Gelect one: a. a movement from Point B to Point A along AS1. b. a shift from AS1 to AS2. C. a movement from Point B to Point C along AS1. d. a shift from AS1 to ASO. Price level
9. Deriving aggregate demand from the income-expenditure model The following graph shows three planned expenditure lines for an economy at three different price levels. PE120 corresponds to the price level of 120; PE100 corresponds to the price level of 100; PE140 corresponds to the price level of 140. The black line (which starts in the bottom left corner) is a 45-degree line illustrating the set of points for which real income and planned expenditure are equal. 800 PE, (P = 100) 700 PE, (P =120) 600 PE, (P =140) Slope: 0.5 500 Y-Intercept: 200 400 300 100 100 200 300 400 500 600 700 800 REAL INCOME (Billions of dollars) The level of equilibrium output at a price level of 100, is On the following graph, plot the aggregate demand curve that results from varying the price level from 100 to 120 to 140, holding all else equal. Hint: Real income and the quantity of output are equivalent. For example, a real income of $100 billion is the same as a quantity of output of $100 billion. PLANNED…
Why is the aggregate demand curve downsloping? Specify how your explanation differs from the explanation for the downsloping demand curve for a single product. What role does the multiplier play in shifts of the aggregate demand curve?
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Which of the following would cause the Aggregate Supply curve to move from AS to AS2 in the graph below? Price Level 150 140 130 120 110 100 90 80 70 60 0 5 10 15 Real GDP ($ billion) AS -AD-AS2 O A federal government increase in spending. O A general increase in energy and labor cost for businesses. O An increase in productivity. O A general decrease in labor cost for businesses. 20 25
ans ences rations If in Year 1 the price level was 100 and real GDP was $20 trillion and in Year 2 the price level was 105 and real GDP was $21 billion, then the predominant change that occured in Year 2 was OA a decrease in aggregate demand. B. an increase (shift to the right) in short-run aggregate supply. OC. a decrease (shift to the left) in short-run aggregate supply OD. an increase in aggregate demand.
The aggregate supply curve shows the relationship between the price level and the: O potential GDP in the economy. O total quantity of output that suppliers collectively produce. total quantity of output that buyers collectively plan to purchase. equilibrium GDP in the economy.
Question 6 Which of the following characteristics is NOT consistent with an upward-sloping AS curve? O when forecasted future prices increase, the AS curve shifts upward. a rise in the firms' pricing power will lead to a rise in the aggregate price. the AS curve passes through a point that corresponds to the natural level of national income and stable price. O as inflation rises output growth falls