The proponents of the hysteresis hypothesis argue that: (i) the short-run and the long-run developments of the economy can be studied separately. (ii) the fluctuations in aggregate demand affect output and employment only in the short run. (iii) negative shocks to aggregate demand can reduce the natural level of output and employment. a. O b. Only (i) and (iii) Only (iii) Only (i) and (ii) O c. O d. Only (ii)

The proponents of the hysteresis hypothesis argue that: (i) the short-run and the long-run developments of the economy can be studied separately. (ii) the fluctuations in aggregate demand affect output and employment only in the short run. (iii) negative shocks to aggregate demand can reduce the natural level of output and employment. a. O b. Only (i) and (iii) Only (iii) Only (i) and (ii) O c. O d. Only (ii)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Beginning at long-run equilibrium in the dynamic model of aggregate demand and aggregate supply, if the central bank permanently reduces its inflation target, then in the first period after the policy change, the dynamic aggregate supply (DAS) curve and the dynamic aggregate demand (DAD) curve a. shifts upward; shifts rightward O b. does not shift; shifts leftward C. does not shift; does not shift d. shifts downward; shifts leftward
As output increases along the short-run aggregate supply curve, briefly explain what happens to the natural rate of unemployment. A. The natural rate decreases because those who are unemployed will be able to find jobs faster. B. The natural rate decreases because there will be fewer workers laid off. O C. The natural rate remains the same because it is not affected by the business cycle. D. The natural rate increases because skill mismatches will occur more rapidly.
Arrange these statements in sequence to explain why the short run aggregate supply (SR AS) curve slopes upward. Suppositions as a starting point Conclusion as to why the SR AS curve slopes upward Answer Bank At the macroeconomic level, the increase in aggregate demand (AD) corresponds to a shift in the firms' demand curve, whereas the firms'supply curve remains fixed. Since customers are demanding more of the firms'product, the firms' demand curves increase, which increases prices and output. The firms'willingness to supply more output at a higher price at a micro level shows a positive relationship, which is then also reflected at the macro level with an upward sloping SR AS curve.
PRICE LEVEL O a. C to D. Ob. D to C. Oc.B to A Od. A to B. D LRAS O B AD QUANTITY OF OUTPUT SRAS, SRAS AD Refer to Figure 34-2. If the economy is in long-run equilibrium, then an adverse shift in short-run aggregate supply would move the economy from
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Investment tax credits are intended to productivity, shifting the curve to the a. increase; long-run aggregate supply; right O b. increase; long-run aggregate supply; left ○ c. increase; aggregate demand; left O d. decrease; long-run aggregate supply; left
This is nopt an essay, I just need help on Letter B. Suppose that the coronavirus pandemic (COVID 19) in 2020 has resulted in a leftward shift of the aggregate demand curve (it has also shifted the short-run aggregate supply to the left, but let’s ignore this effect here for simplification). A. Use the aggregate-demand/aggregate-supply model to show the effects on output and the price level/inflation in both the short run and long run (assume that the short-run aggregate supply curve is upward sloping). B. Can policymakers use monetary policy (and/or fiscal policy) to accommodate this shock? Describe what happens to the economy in response to this policy action. This is not an Essay.
Assume a Keynesian AS curve. In the short run, when there is a large negative output gap (AD-AS intersection to the left of the full employment level of output), then O the government should use contractionary demand management policy expansionary demand management policy is likely to be highly inflationary O expansionary demand management policy does not cause much inflation contractionary demand management policy is likely to be highly inflationary
Which of the following are true about the imperfect information model of the upward-sloping short-run aggregate supply curve? (i) It assumes imperfect competition among firms. (ii) Producers presume that the relative price of their goods increase whenever overall prices increase. (iii) It is costly to monitor the prices of all goods, so producers make do by observing chiefly the prices of their own goods. O a. (i), (ii), and (iii) O b. Only (ii) and (iii) O c. Only (i) and (iii) O d. Only (i) and (ii)
Price Level Long-run AS Y, Y₁ Short-run AS Quantity of Real Output Suppose the economy is operating in a recession such as point B in the graph. If policymakers allow the economy to adjust to the long-run natural level on its own O a people will reduce their price expectations and aggregate demand will shift right O b. people will reduce their price expectations and the short-run aggregate supply will shift right Opeople will raise their price expectations and the short-run aggregate supply will shift left O d. people will raise their price expectations and aggregate demand will shift left