Suppose there is a major global shortage of microchips, a key input for many industries. Using the aggregate demand-aggregate supply model, what impact will this have on the economy? a) This will shift aggregate demand left, which will cause output to fall and the price level to fall. b) This will shift aggregate demand right, which will cause output to rise and the price level to rise. c) This will shift short-run aggregate supply left, which will cause output to fall and the price level to rise. d) This will shift short-run aggregate supply right, which will cause output to rise and the price level to fall.

Suppose there is a major global shortage of microchips, a key input for many industries. Using the aggregate demand-aggregate supply model, what impact will this have on the economy? a) This will shift aggregate demand left, which will cause output to fall and the price level to fall. b) This will shift aggregate demand right, which will cause output to rise and the price level to rise. c) This will shift short-run aggregate supply left, which will cause output to fall and the price level to rise. d) This will shift short-run aggregate supply right, which will cause output to rise and the price level to fall.

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter15: Macroeconomic Viewpoints: New Keynesian, Monetarist, And New Classical

Section: Chapter Questions

Problem 16E

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Suppose there is a major breakthrough in renewable energy technology, leading to a surge in investment by businesses to adopt this new technology. Using the aggregate demand-aggregate supply model, what impact will this have on the economy? a) This will shift aggregate demand left, which will cause output to fall and the price level to fall. b) This will shift aggregate demand right, which will cause output to rise and the price level to rise. c) This will shift short-run aggregate supply left, which will cause output to fall and the price level to rise. d) This will shift short-run aggregate supply right, which will cause output to rise and the price level to fall.
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The graph below is associated with a hypothetical country. Consider an increase in aggregate demand (AD). Specifically, aggregate demand shifts to the right from AD1AD1 to AD2AD2, causing the quantity of output demanded to rise at each price level. For instance, at a price level of 140, output is now $400 billion, where initially it was $300 billion. Fill in the missing values in the table by selecting the change in each scenario required to increase aggregate demand. Change required to increase AD Expected rate of return on investment. (decrease/increase) Incomes in other countries (decrease/increase) Consumer expectations about future profitability. (improve/worsen) Government spending (increase/decrease)
Researchers in an oil producing country discover a cost effective method using existing levels of capital and labour to extract large amounts of petroleum resources that were previously inaccessible. All else equal, which of the following will most likely occur. Select one: The long run aggregate supply curve will shift to the left The long run aggregate supply curve will shift to the right The aggregate demand curve will shift to the left The aggregate demand curve will shift to the right
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The following graph shows an increase in aggregate demand (AD) in a hypothetical country. Specifically, aggregate demand shifts to the right from AD1 to AD2, causing the quantity of output demanded to rise at all price levels. For example, at a price level of 140, output is now $400 billion, where previously it was $300 billion. 170 160 150 140 - 130 AD2 120 110 AD, 100 90 100 200 300 400 500 600 700 800 OUTPUT (Billions of dollars) The following table lists several determinants of aggregate demand. Complete the table by indicating the change in each determinant necessary to increase aggregate demand. Change Needed to Increase AD Wealth Taxes Interest rates The value of the domestic currency relative to the foreign currency PRICE LEVEL
Suppose there is an international recession hits the US economy, what is the long-run equilibrium will look like? What changes in the U.S GDP? Does it affect to the long run aggregate supply and short run aggregate supply?
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The figure to the right shows the result of an increase in aggregate demand from AD to AD₁.In its new short run equilibrium the economy is resting its potential output. Because the economy is producing beyond its potential output level, input prices and hence production costs are being pushed upward. Using either the line drawing tool or the 3-point curved line drawing tool, illustrate the impact of rising production costs. Properly label your new line or curve. Note: Carefully follow the instructions above and only draw the required object. According to your figure, the eventual long-run impact of the increase in aggregate demand is O A. higher prices, lower output. OB. higher prices, higher output. OC. higher prices, unchanged output. O D. higher output, unchanged prices. Price level, P AS (Long run) ASO (Short run) Yo Y₁ Aggregate output (income), Y AD₁ ADO
When does macroeconomic equilibrium occur? Multiple Choice When exports equal imports. When the aggregate supply equals the long-run Aggregate Supply When the aggregate demand equals the long-run Aggregate Supply. When the aggregate quantity demanded is equal to the aggregate quantity supplied.
Does each scenario below cause a movement along the curve or a shift in the curve? Explain using the model of Aggregate Demand and Aggregate Supply. [1] Consumers in the U.S. read negative economic news and they expect weak future economic growth. [2] Due to the decrease in the price level in the U.S., consumers substitute out of clothes made overseas into clothes made in the US. [3] An increase in the price level leads to less savings, which increases the interest rate. [4] Several European economies go into recession due to the current pandemic.