Suppose Canada's economy is in a long-run equilibrium with real GDP equal to potential output. Now suppose there is a decrease in world demand for Canada's goods. In the short run, OA. real GDP and the price level both fall; real GDP returns to its original level with a lower price level OB. real GDP rises and the price level falls; real GDP returns to its original level with a higher price level OC. real GDP and the price level both rise; real GDP is below its original level with a higher price level O D. real GDP falls and the price level rises; real GDP is below its original level with a lower price level In the long run,

Suppose Canada's economy is in a long-run equilibrium with real GDP equal to potential output. Now suppose there is a decrease in world demand for Canada's goods. In the short run, OA. real GDP and the price level both fall; real GDP returns to its original level with a lower price level OB. real GDP rises and the price level falls; real GDP returns to its original level with a higher price level OC. real GDP and the price level both rise; real GDP is below its original level with a higher price level O D. real GDP falls and the price level rises; real GDP is below its original level with a lower price level In the long run,

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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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.
Which of the following causes the short-run aggregate supply curve to shift to the right? O A. an increase in the expected price of an important natural resource B. a positive technological change O C. a higher expected future price level O D. a decrease in the capital stock
Suppose Canada's economy is in a long-run equilibrium with real GDP equal to potential output. Now suppose there is an increase in the Canadian-dollar price of all imported raw materials. In the short run, In the long run, A. real GDP and the price level both fall; real GDP is below its original level with a lower price level B. real GDP falls and the price level rises; real GDP and the price level return to their original levels C. real GDP and the price level both rise; real GDP is above its original level with a higher price level D. real GDP rises and the price level falls; real GDP returns to its original level with a lower price level E. real GDP and the price level both rise; real GDP returns to its original level with a higher price level
Solutions for c,d and e
on Indicate whether the following factor will affect aggregate demand (AD) or aggregate supply (AS) and whether the effect would be an increase or a decrease. Then indicate what will happen to the price level and the level of Real GDP and what type of equilibrium will result assuming that the economy is initially in long-run equilibrium. a) A decrease in the nominal wage rate. b) A decrease in exports. c) A decrease in the exchange rate. d) The discovery of vast new oil field in AD no effect decrease + increase no effect AS increase no effect increase increase decrease decrease decrease Real GDP increase decrease increase increase Equilibrium recessionary gap ⇒ inflationary gap inflationary gap inflationary gap AP ? Q Fir
If the economy starts at O and moves to R in the short run, the economy PRICE LEVEL R LRAS O O moves to O in the long run. moves to P in the long run. moves to Q in the long run. a QUANTITY OF OUTPUT O stays at R in the long run. AD₂ SRAS, SRAS, AD
Which of the following would cause the Aggregate Supply curve to move from AS to AS2 in the graph below? A) A general increase in energy and labor cost for businesses. B) A general decrease in labor cost for businesses. C) An increase in productivity. D) A federal government increase in spending.
Starting at long run equilibrium, ceteris paribus, an increase in the costs of widely used factors of production would most likely O Increase short run aggregate supply and create an inflationary gap. O Decrease long run aggregate supply and create a recessionary gap. O Decrease short run aggregate supply and create a recessionary gap. O Decrease aggregate demand and create a recessionary gap.