Suppose the economy is in a long-run equilibrium. Draw a diagram to illustrate the state of the economy. Be sure to show aggregate demand, short-run aggregate supply, and long-run aggregate supply.  Now suppose that a stock market crash causes aggregate demand to fall. Use your diagram to show what happens to output and the price level in the short run. What happens to the unemployment rate? Explain how the economy reaches the long run equilibrium from 5b.

Q: Why unemployment results when Aggregate Demand is lesser than Aggregate Supply in the economy?

A: Aggregate demand refers to the total demand for the finished goods and services in an economy—the…

Q: Can I get some help understanding these questions?

A: Aggregate demand is defined as the total demand for all the final goods and services produced in an…

Q: What stage in the business cycle does the shift in Aggregate Demand represent?

A: Aggregate demand refers to the total expenditure that all the sectors of the economy are planning to…

Q: Which cost of production is the most influential in short-run aggregate supply and how does the…

A: Aggregate Supply The aggregate supply is the relationship between an economy's price level and…

Q: Answer the following questions below a) What relationship does the aggregate demand curve show?…

A: The entire amount of goods and services that all consumers in an economy are willing and able to buy…

Q: What is A Dynamic Aggregate Demand and Aggregate Supply Mode ?

A: Aggregate supply refers to the total amount of goods and services supplied in the economy at given…

Q: Suppose the aggregate demand (AD) and short-run aggregate supply (AS) schedules for an economy whose…

A: Answer 1.  The SRAS curve can be divided into three zones: a horizontal Keynesian zone, a vertical…

Q: Suppose that aggregate supply curve is shifting to the right by 2.5 percent a year. If aggregate…

A: The whole offer of products and services created within an economy at a precise overall worth in a…

Q: Ral GDP the graph, we see that long-run aggregate supply decreased during the Great ession. This was…

A: The graph given above depicts an economy where the aggregate demand and the long run aggregate…

Q: Suppose the Fed doubles the growth rate of the quantity of money in the economy. In the long run,…

A:

Q: the difference between the short-run aggregate supply curve and the long-run aggregate supply.

A: ANSWER   the difference between the short-run aggregate supply curve and the long-run aggregate…

Q: Draw lines for the long-run aggregate supply curve. Explain its shape and what can cause it to move…

A: Macroeconomics is the study of the entire economy, which necessitates juggling many different ideas,…

Q: Why does the effect of a given increase in aggregate demand have a larger effect on real output in…

A: Answer: Introduction: In the short run, the output can be increased by employing more laborers. In…

Q: Statistics Canada reported that in the second quarter of 2017 Canadian exports increased by $14…

A: The aggregate demand curve shows the relationship between the price level and the quantity of goods…

Q: Starting from long run equilibrium,  use the basic aggregate demand and aggregate supply diagram to…

A: Aggregate demand shows the total expenditure done in the economy. Aggregate supply curve shows the…

Q: The following graph shows the short-run and long-run aggregate supply curves (SRAS and LRAS) for an…

A: Shock can be defined as a change which can bring a shift in the aggregate demand or short-run…

Q: Explain the difference between long run and short run aggregate supply. Why do economists…

A: Aggregate supply is defined as the total amount of goods produced and offered for sale by the…

Q: The recession of 2007-2009 was made worse by a global financial crisis. Show the effect of the Great…

A: After the Great Depression in 1929, recession of 2007 to 2009 affect the whole world economy very…

Q: Does each scenario below cause a movement along the curve or a shift in the curve? Explain using the…

A: The aggregate demand is the downward sloping curve which explains the negative relationship between…

Q: Explain whether each of the following events shifts the short-run aggregate supply curve, the…

A: Note: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question…

Q: Create a graph that shows where Mexico currently is on the business cycle. Be sure to include an…

A: Mexico is currently running into recession attributing the pandemic situation and fiscal tightening…

Q: Draw an ADAS graph at equilibrium. Suppose there is an increase in government spending. Which curve…

A: The following diagram shows the AD-AS graph at equilibrium.

Q: Draw an ADAS graph at equilibrium. Suppose the stock market crashes. Which curve will shift? Draw…

A: Stock market crashes means sudden decline in stock prices which is a great loss to the existing…

Q: Use the dynamic model of aggregate demand and supply to illustrate a situation where the economy is…

A: The AD-As model implies inflation may arise due to shifting in the Aggregate demand curve on the…

Q: Draw a graph, using the Aggregate Demand – Aggregate Supply curves, the result of a tax increase and…

A: Inflation is the process of abnormal increase in the general price level in the economy and the…

Q: What determines aggregate supply in the short run and what determines it in the long run?

A: Aggregate supply refers to the whole quantity of products and services generated within an economy…

Q: Use the figure to answer the following questions. Explain your reasoning and show your answers on…

A: An inflationary gap occurs when the actual level of aggregate demand (the total demand for goods and…

Q: As a result of this change, the unemployment rate Use the sticky-wage theory of aggregate supply to…

A: Aggregate demand refers to the sum of all the demands for the goods and services produced within the…

Q: Explain in detail why the aggregate short-run aggregate supply curve is upward sloping?

A: According to classical macroeconomic theory, the aggregate supply curve is perfectly vertical in the…

Q: Assume the economy is in long-run equilibrium in 2019. Use the Aggregate Demand and Aggregate Supply…

A: Hi thanks for the question. Since there are multiple questions posted, we will answer first three…

Q: 4. Draw an ADAS graph at equilibrium. Suppose there is widespread fear of a recession. Which curve…

A: A recession refers to the point where the economy is less than the full employment level of output.…

Q: prepare a list of events that would shift the aggregate supply curve leftward or rightward.

A: The aggregate supply shows the total level of supply within the economy and also depicts how supply…

Q: Now adjust the graph to show the new long-run equilibrium. What causes the economy to move from its…

A: The AD-AS framework, also known as the Aggregate Demand-Aggregate Supply framework, is a…

Q: How does the aggregate demand and aggregate supply looks in the long run. Explain with the help of a…

A: Aggregate demand: It is the sum total of the final value of all the goods and services that have…

Q: Suppose an economy is in long-run equilibrium. a. Use the model of aggregate demand and aggregate…

A: a.The aggregate demand curve represents the relationship between the price level prevailing in the…

Q: What are three factors that help explain the slope of the aggregate demand curve? What is the most…

A: The slope of the Aggregate Demand curve is downward sloping. The three reasons include: 1-Pigou…

Q: ework (Ch 20) ppose the Fed doubles the growth rate of the quantity of money in the economy. In the…

A: The answers are - The inflation rate The price level

Q: Explain what will happen as a result of the following events. In each case, draw an aggregate demand…

A: The aggregate demand curve is downward sloping which shows the negative relationship between price…

Q: What is the shape of the aggregate supply curve in the long run and in the short run? Explain the…

A: The AS {"aggregate supply"} is described as the total Q {"quantity"} of output that the firms will…