Suppose the economy is in a long-run equilibrium, as shown in the following graph. Now suppose that firms become pessimistic about future business conditions and decide to cut back on investment spending, resulting in a fall in aggregate demand. Use your diagram to show what happens to output and the price level in the short run, Price Level LRAS Aggregate Supply Quantity of Output As a result of this change, the unemployment rate, Aggregate Demand that will occur in the long run. Aggregate Supply LRAS ? Use the sticky-wage theory of aggregate supply to think about what will happen to output and the price level in the long run (assuming there is no change in policy)

Suppose the economy is in a long-run equilibrium, as shown in the following graph. Now suppose that firms become pessimistic about future business conditions and decide to cut back on investment spending, resulting in a fall in aggregate demand. Use your diagram to show what happens to output and the price level in the short run, Price Level LRAS Aggregate Supply Quantity of Output As a result of this change, the unemployment rate, Aggregate Demand that will occur in the long run. Aggregate Supply LRAS ? Use the sticky-wage theory of aggregate supply to think about what will happen to output and the price level in the long run (assuming there is no change in policy)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Changes in what four variables will shift the long run aggregate supply curve?
The following graph represents the short-run aggregate supply curve (SRAS) based on an expected price level of 120. The economy's full- employment output level is $9 trillion. Major unions across the country have recently negotiated three-year wage contracts with employers. The wage contracts are based on an expected price level of 120, but the actual price level turns out to be 160. Show the short-run effect of the unexpectedly high price level by dragging the curve or moving the point to the appropriate position. PRICE LEVEL (CPI) 240 200 160 40 0 0 3 SRAS[120] 6 9 12 REAL GDP (Trillions of dollars) 15 18 SRAS[120] 0 (?) Interpret the change you drew on the previous graph by filling in the blanks in the following paragraph:
What change does recession has on the price and output level when the change in aggregate demand is more than change in aggregate supply ?
There are three distinct reasons why the aggregate demand curve slopes downward. List and discuss each reason. The aggregate supply curve can be upward sloping or vertical depending upon the time frame we are considering (short-run or long-run). In what time frame is the aggregate supply curve vertical? Why? In what time frame is the aggregate supply curve upward sloping? Why?
Is there a connection between the concepts of Long Run Aggregate Supply and the Natural Rate of Unemployment? Describe precisely how you think an economy would move towards long run equilibrium over time.
Please i need the answer for the graph
In 2010, the economy of Sanaton had an aggregate demand and aggregate supply according to the following schedule: Price level Aggregate Demand Short-Run Aggregate Supply 80 $1155.00 90 $1220.00 100 $1285.00 110. $1350.00 $1415.00 $1480.00 $1545.00 120 130 140 $1575.00 $1500.00 $1425.00 $1350.00 $1350,00 $1200.00 $1125.00 What was the equilibrium price level in Sanaton in 2010?
From the information provided, determine whether you are given an Aggregate Supply or Aggregate Demand Schedule and, if Aggregate Supply, the time frame associated with the price level and output HINT: You may want to plot out the points on a graph. 6 Price Level 27:26 120 121 122 123 124 Multiple Choice Immediate Short Run Aggregate Supply Long Run Aggregate Supply Short Run Aggregate Supply Output (in billions) $550 555 558 561 565 Aggregate Demand
The following graph shows the aggregate demand curve (AD), the short-run aggregate supply curve (AS), and the long-run aggregate supply curve ( LRAS) for a hypothetical economy. Initially, the expected price level equals the actual price level, and the economy experiences long-run equilibrium at a natural level of output of $100 billion.. Suppose a bout of severe weather drives up agricultural costs, increases the costs of transporting goods and services, and increases the costs of producing goods and services. Use the graph to help you answer the questions about the short-run and long-run effects of the increase in production costs that follow. (Note: You will not be graded on any adjustments made to the graph.) Hint: For simplicity, ignore any possible impact of the severe weather on the natural level of output.
The following event has occurred in the history of the United States: The world oil price rises sharply. Explain for event whether it changes short-run aggregate supply, long-run aggregate supply, aggregate demand, or some combination of them.
Need help with this. I gave possible answers(choose 1 only), also please show how to do the graph as well (where to move the new SRAS and AD if needed) Thank you!