Need help with this. Please show how to do the graphs. I showed with lines where you can move them to and of course while you read the paragraphs you will be able to know it. Thanks! Now, suppose prices remain higher than expected. As a result, in the next round of labor negotiations, unions demand and obtain higher wagesfor their members. The following graph shows the long-run aggregate supply curve (LRAS) at full-employment output for this economy as wellas the same initial short-run aggregate supply curve as in the first graph. Shift one or both of these lines to illustrate how the economy adjuststo a new long-run equilibrium.240200160PRICE LEVEL (CPI)심4003↓LRAS71SRAS6912REAL GDP (Trillions of dollars)1518LRASSRAS 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 anexpected 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 bydragging the curve or moving the point to the appropriate position.PRICE LEVEL (CPI)24020016040003SRAS[120]6912REAL GDP (Trillions of dollars)1518lower/higherSRAS[120]☐?Interpret the change you drew on the previous graph by filling in the blanks in the following paragraph:less/moreprofit than they expected on each unit of output they produce, and, therefore,lower/higher than workers andits full-employmentThe higher-than-expected price level causes firms to earnthey decrease/increaseir production level. At the same time, the real value of wages and other resource prices isfirms expected when they signed long-term contracts. As a result, economy as a whole produces at a leveloutput, and the unemployment rate isthan its natural rate.above/below

Full employment means that unemployment is equivalent to its natural rate. Full employment also…

Answered: The following graph represents the…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Question

Need help with this. Please show how to do the graphs. I showed with lines where you can move them to and of course while you read the paragraphs you will be able to know it. Thanks!

Now, suppose prices remain higher than expected. As a result, in the next round of labor negotiations, unions demand and obtain higher wages
for their members. The following graph shows the long-run aggregate supply curve (LRAS) at full-employment output for this economy as well
as the same initial short-run aggregate supply curve as in the first graph. Shift one or both of these lines to illustrate how the economy adjusts
to a new long-run equilibrium.
240
200
160
PRICE LEVEL (CPI)
심
40
0
3
↓
LRAS
71
SRAS
6
9
12
REAL GDP (Trillions of dollars)
15
18
LRAS
SRAS

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
lower/higher
SRAS[120]
☐
?
Interpret the change you drew on the previous graph by filling in the blanks in the following paragraph:
less/more
profit than they expected on each unit of output they produce, and, therefore,
lower/higher than workers and
its full-employment
The higher-than-expected price level causes firms to earn
they decrease/increaseir production level. At the same time, the real value of wages and other resource prices is
firms expected when they signed long-term contracts. As a result, economy as a whole produces at a level
output, and the unemployment rate is
than its natural rate.
above/below

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 3 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Follow-up Questions

Read through expert solutions to related follow-up questions below.

Follow-up Question

I have a question regarding the last graph that you did. I cannot shift the SRAS like you did. Check the two ScreenShots that I attached. Which one will be correct one ?

240
200
160
PRICE LEVEL (CPI)
8
40
0
3
LRAS, LRAS₂
SRAS
6
9
12
REAL GDP (Trillions of dollars)
15
18
LRAS
PR
SRAS

PRICE LEVEL (CPI)
240
200
160
120
80
40
0
0
3
LRAS
SRAS₂
SRAS,
6
9
12
REAL GDP (Trillions of dollars)
15
18
LRAS
SRAS

Solution

by Bartleby Expert

SEE SOLUTION

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions