Starting with a long run equilibrium, a Fed policy insisting on an even higher GDP may lead to a higher inflation only. O a surplus in the labor market in the short run. lower wages in future. a higher GDP per capita in the long run.

Starting with a long run equilibrium, a Fed policy insisting on an even higher GDP may lead to a higher inflation only. O a surplus in the labor market in the short run. lower wages in future. a higher GDP per capita in the long run.

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter11: Managing Aggregate Demand: Fiscal Policy

Section: Chapter Questions

Problem 3DQ

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Refer to the accompanying figure. LRAS Inflation a A 0, y' Output O O An economy is currently in long-run equilibrium at point B, at an inflation rate of m, which is too high to sustain economic growth. If an anti-inflationary policy is enacted, the economy will be in short-run equilibrium at point creating gap. O SRAS O SRAS AD' AD A; an expansionary A; a recessionary D; a recessionary D; an expansionary
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Figure 8.3 Price Level Long run Aggregate Supply A B AS₁ AS2 AD1 AD2 Quantity of Output Long run Aggregate Supply = Potential GDP Refer to Figure 8.3 above. If the economy is at point A, which of the following would cause a change from AD1 to AD2? An increase in expected future inflation. ○ An increase in expected future profit. ○ A tax cut or an increase in either transfer payments. O An increase in the interest rate or a decrease in the quantity of money.
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Refer to the accompanying figure. LRAS Intatona BRAS SRAS AD AD Output Starting from long-run equilibrium at point C, an adverse inflation shock that increases inflation from n to n' will lead to a short-run equilibrium at point and eventually to a long-run equilibrium at point ,if left to self-correcting tendencies.
Very large aggregate supply changes are always responsible for very high inflation rates. Select one: O True O False
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Refer to the given figure. Inflation T 000 LRAS Y' B U AD Output This economy has a short-term equilibrium at point A. In response to gradually falling inflation, this economy will eventually move from its short-run equilibrium to its long-run equilibrium. Graphically, this would be seen as SRAS aggregate demand shifting rightward. aggregate demand shifting leftward. O short-run aggregate supply shifting downward. long-run aggregate supply shifting leftward.
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The economy begins in longcrun equilibrium. Thenone day, the president appoints a new chair of theFederal Reserve. 11\is new chainnan is well known forher view that inflation is not a major problcn1 for aneconomy.a. How would this news affect the price level thatpeople would expect to prevail?b. How would this change in the expected pricelevel affect the nonlinal wage that workers andfmn.s agree to in their new labor contracts?c. How would this change in the nonlinal wageaffect the profitability of producing goods andservia,s at any given price level?d. How docs this change in profitability affect theshort-run aggregate-supply curve?e. ff aggregate demand is held constant, how docsthis sllift in the aggregate-supply curve affect theprice level and the quantity of output produced?f. Do you think this Fed chainnan was a goodappointment?
Please give just answer. There is no need to explain. i. If a country experiences high GDP and inflation, followed by a lower GDP and deflation, this is an example of O Unemployment O Recession O the Business Cycle O Supply and Demand O None of the above ji. What causes inflation? O People don't have enough money O People have too much money O People have too much money and many businesses want some of that money People owe a lot of money The government causes inflation by raising interest rates iii. The Water and Diamond Paradox explains: Why supply and demand always meets in the middle of a graph O Marginal utility of diamonds O Why water is inexpensive while diamonds are so expensive O Why water is so expensive while diamonds are inexpensive O None of the above iv. The unemployment rate is: O The number of people who don't want to work The number of people who are working but don't want to work The number of people who don't want to work and are not working The number of people who…
Q1 If people expect this period's inflation is equal to last period's inflation, an increase in the price of oil in the medium run will cause: a. A reduction in output O b. An increase in the real policy rate All of the answers here are correct Oc Od. An increase in the price level