The imaginary country of Harris Island has the aggregate supply and aggregate demand curves as Table shows. Price Level: AD/AS Price Level AD AS 100 800 300 120 700 425 140 600 600 160 500 670 180 400 720 Plot the AD/AS diagram (You don't have to submit the plot, but I recommend doing it as it will help you with this problem). Identify the equilibrium. Blank #1 - Equilibrium Price Level Blank #2 - Equilibrium GDP Blank #3 - Would you expect unemployment in this economy to be relatively high or low? Blank #4 - Would you expect concern about inflation in this economy to be relatively high or low? Imagine that consumers begin to lose confidence about the state of the economy, and so AD becomes lower by 275 at every price level. Blank #5 - What is the new equilibrium GDP? Blank #6 - What is the new equilibrium Price Level? How will the shift in AD affect (answer is rise or fall)... Blank #7 - the original output? Blank #8 - the price level? Blank #9 - unemployment?
The imaginary country of Harris Island has the
|
Price Level |
AD |
AS |
|
100 |
800 |
300 |
|
120 |
700 |
425 |
|
140 |
600 |
600 |
|
160 |
500 |
670 |
|
180 |
400 |
720 |
Plot the AD/AS diagram (You don't have to submit the plot, but I recommend doing it as it will help you with this problem). Identify the equilibrium.
Blank #1 -
Blank #2 - Equilibrium
Blank #3 - Would you expect
Blank #4 - Would you expect concern about inflation in this economy to be relatively high or low?
Imagine that consumers begin to lose confidence about the state of the economy, and so AD becomes lower by 275 at every price level.
Blank #5 - What is the new equilibrium GDP?
Blank #6 - What is the new equilibrium Price Level?
How will the shift in AD affect (answer is rise or fall)...
Blank #7 - the original output?
Blank #8 - the price level?
Blank #9 - unemployment?
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 1 images
