The following graph shows several aggregate demand and aggregate supply curves for an economy whose potential output is $4 trillion. The curves are labeled a, b, c, and d. Three points on the graph are also indicated by grey stars and labeled X, Y, and Z. PRICE LEVEL 160 150 140 LRAS 130 120 110 100 90 80 * с d a b 0 Description 1 2 3 4 5 6 REAL GDP (Trillions of dollars) Identify which curve on the previous graph corresponds to each of the following descriptions. If the curve described is not shown on the graph, choos Not Shown. In the descriptions, AD represents aggregate demand; SRAS represents short-run aggregate supply; LRAS represents long-run aggregate supply. AD SRAS if the expected price level is 120 SRAS if the expected price level is 140 SRAS If the expected price level is 110 O O O 7 b 8 с d Not Shown O

The following graph shows several aggregate demand and aggregate supply curves for an economy whose potential output is $4 trillion. The curves are labeled a, b, c, and d. Three points on the graph are also indicated by grey stars and labeled X, Y, and Z. PRICE LEVEL 160 150 140 LRAS 130 120 110 100 90 80 * с d a b 0 Description 1 2 3 4 5 6 REAL GDP (Trillions of dollars) Identify which curve on the previous graph corresponds to each of the following descriptions. If the curve described is not shown on the graph, choos Not Shown. In the descriptions, AD represents aggregate demand; SRAS represents short-run aggregate supply; LRAS represents long-run aggregate supply. AD SRAS if the expected price level is 120 SRAS if the expected price level is 140 SRAS If the expected price level is 110 O O O 7 b 8 с d Not Shown O

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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PRICE LEVEL 160 150 140 130 120 110 100 90 80 0 с 1 d X a 2 3 4 5 REAL GDP (Trillions of dollars) 6 + 7 b H 8 (?) Identify which curve on the previous graph corresponds to each description in the following table. If the curve described does not appear on the graph, choose Not Shown. Description Short-run aggregate supply (SRAS) when there is a recessionary gap Aggregate demand (AD) Short-run aggregate supply (SRAS) when there is an inflationary gap Short-run aggregate supply (SRAS) when the economy is in long-run equilibrium Long-run aggregate supply (LRAS) a O b O O O с O O O O d O O Not Shown
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Please no written by hand solution Assume that the potential GDP of the economy of Arion is $1,160, and that the aggregate demand and aggregate supply are as shown in the following table. Aggregate Quantity Demanded 1 Aggregate Quantity Demanded 2 Price Index Aggregate Quantity Supplied $1,240 96 $1,000 1,220 97 1,040 1,200 98 1,080 1,180 99 1,120 1,160 100 1,160 1,140 101 1,200 1,120 102 1,240 1,100 103 1,270 1,080 104 1,300 1,060 105 1,330 a. The value of equilibrium real GDP is and the price level is . There is (Click to select) gap. The gap is equal to $ . b. If firms become more optimistic and aggregate demand increases by $60, complete the aggregate demand 2 column in the table above. c. The new value of equilibrium real GDP is and the price level is now . d. There is (Click to select) gap. The gap is equal to $ .
5.
The following graph shows the aggregate demand curve in a hypothetical economy. Assume that the economy's money supply remains fixed. PRICE LEVEL (CPI) 180 T 150 140 130 120 110 100 90 80 0 Aggregate Demand 100 200 300 400 500 600 REAL GDP (Billions of dollars) 700 800 (?) Which of the following are reasons the aggregate demand curve is downward sloping? Check all that apply. A higher price level makes domestically produced goods more expensive than foreign goods. A lower price level leads to a lower interest rate. A higher price level decreases consumption through the substitution effect. As the aggregate price level rises, the purchasing power of households' saving balances will demanded to This phenomenon is known as the effect. causing the quantity of output
Suppose that the economy is depicted in the graph to the right. 160- a. The current equilibrium price level and output level respectively are: and S trillion. (Enter your response as a whole number.) SRAS 150- LRAS 140- 130- 120- O 110- 100- 소 90- 80- 70- AD 60- 50- 40- 10' 12' 14 16 18 20 Real GDP ($ trillions) Price level
Worksheet 5: Aggregate Supply and Aggregate Demand Name: Complete the questions below. Be sure to show your work. Upload this worksheet to Moodle. Consider the following Aggregate Supply and Aggregate Demand curves. 1. P Draw 10 8 6 4 2 69% 20 40 G93 AS/AD LRAS 60 80 SRAS AD 100 120 GDP 3. Does this graph represent a Recessionary Gap, an Inflationary Gap, or an economy that is operating at its potential output? Explain. the graph. Pregate Demand?
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