Suppose that the Canadian economy is governed by the following equations Y = Y, - a(r -p)+e; T: = i- E17+1 T = E-1T +(Y - Y1) + vt E1T+1 = T i = T +p+0(7 – n)+by (Yt - Y;) (1) (2) (4) (5) Since the coefficient is negative, more sensitive implies a coefficient less than-80 (e.g.,-90,-100, etc). Recall that the sacrifice ratio is computed by dividing the output lost by the amount of disinflation. (a) Derive the long-run equilibrium for the dynamic AD-AS model. Assume there are no shocks to demand or supply and that inflation has stabilized.

Suppose that the Canadian economy is governed by the following equations Y = Y, - a(r -p)+e; T: = i- E17+1 T = E-1T +(Y - Y1) + vt E1T+1 = T i = T +p+0(7 – n)+by (Yt - Y;) (1) (2) (4) (5) Since the coefficient is negative, more sensitive implies a coefficient less than-80 (e.g.,-90,-100, etc). Recall that the sacrifice ratio is computed by dividing the output lost by the amount of disinflation. (a) Derive the long-run equilibrium for the dynamic AD-AS model. Assume there are no shocks to demand or supply and that inflation has stabilized.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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On the graph, label your starting AD line as AD 2019. Draw a new AD line showing the change to AD due to the pandemic. Label your starting SRAS line as SRAS 2019. Draw a new SRAS line showing the change to supply due to the pandemic.Label the new short-run equilibrium RGDP and Price Level. Does output (i.e. RGDP) increase or decrease in your model? Does the price level increase or decrease in your model? According to the AD-AS model when RGDP falls the unemployment rises and vice versa. Does your graph indicate an increase or decrease in the unemployment rate
Please note I only need help with Part 4 and 5. I have answers for the other parts. Thank you so much for your time and effort! Figure 2: Keynes’s AD-AS Model (Image normally goes here) Part 1:Changes in which factors could cause aggregate demand to shift from AD to AD1? What could happen to the unemployment rate? What could happen to the inflation rate? Part 2: The Keynesian AD-AS model describes what happens with price levels when aggregate demand increases. Could you find any evidence from the last ten-fifteen years that might support AD-AS model descriptions of demand-pull inflation, cost-push inflation, and recession? For example, you could find data on the GDP’s of any two countries from 2000 to 2017 to support your findings. Please note the followong for the next 3 parts of this. In macroeconomics, the immediate short run is known as a length of time when both input prices and output prices are fixed. In the short-run, input prices are fixed but output prices are variable. In…
Using the AD-AS model, if consumers and business become more optimistic about the future direction of the economy and increase spending, then: a-long-run aggregate supply will decrease. b-aggregate demand will decrease. c-aggregate demand will increase. d-long-run aggregate supply will increase.
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