a. The real wage rate (in base year prices) is $b. Suppose that aggregate demand increases by $400. Draw the new AD curve in the graph above. Plot only the endpoints of thecurve.c. At the new equilibrium real GDP level, the value of the real wage rate will be $[d. As a result of the change in prices in b), suppose that nominal wage increases, causing aggregate supply to change by $400. Drawthe new AS curve in the graph above. Plot only the endpoints of the curve.e. At the new equilibrium, the new real wage rate will be $[At the new equilibrium in e), the value of the nominal wage rate will be $ Suppose that the economy of Witland in the figure below is at full-employment equilibrium and the present nominal wage rate is $22per hour. Round your answers to two decimal places.Price Level21018015012090250450The economy of Witland65078500501250Real GDP45016501850ASAD ToolsLAS2050AD2A$2

In the context of economics and other disciplines, equilibrium is defined as a state of stability or…

Answered: The real wage rate (in base year…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Analyze the SR and LR impact of a rise in Taxes (T) on the economy. Note that higher Taxes affect disposable income. Assume that the economy starts in General Equilibrium. 1. Now show the impact of the fall in optimism on the IS-LM diagram and the AD-AS diagram BOTH in SR and LR. No discussion. Clearly show & label the SR impact and the LR impact in both diagrams. 2. Now use the "time diagrams", to show the impact of this shock over time on the following 2 variables: real interest rate (r) and real money demand.
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Suppose the economy produces real GDP of $50 billion when unemplo plot the economy's long-run aggregate supply (LRAS) curve. PRICE LEVEL 132 128 124 120 116 112 108 104 100 0 10 20 30 40 50 REAL GDP (Billions of dollars) 60 70 80
Suppose the economy operates at potential output, if the amount that businesses plan to invest is greater than the amount that consumers plan to save, then The economy will experience inventory accumulation There will be an inflationary gap Equilibrium GDP will be less than aggregate investment There will be a recessionary gap O O O O
Briefly explain the reason for the near-vertical shape of the SRAS curve on its far right.
AD will shift to the right, other things being equal, when
Draw diagram of a typical IS-LMmodel and indicate the changes in all the variables on the diagram should there be an increase in aggregate expenditure causing a shift of the IS curve to the right ( indicate the shift in the IS curve on your diagram) Indicate where macroequilibrium will be and properly label the axes on the diagram. Briefly explain what you understand such an IS-LM model is actually reflecting in terms of macroeconomics
Price level (GDP price Index 2012-100) Pocential AS 130 GDP 120 110 100 90 AD 19.0 195 20.0 20.5 21.0 21.5 Real GDP (trillons of 2012 dollars) In the figure above, the economy is at an equilibrium with real GDP of $20 trillion and a price level of 110. As the economy moves toward its ultimate equilibrium, the curve shifts because O a. aggregate supply; leftward; the money wage rate rises O b. aggregate supply; rightward; the money wage rate falls O c. aggregate demand; leftward; the money wage rate rises d. potential GDP; leftward; the money wage rate falls O e. aggregate demand; rightward; the money wage rate falls
When aggregate production is less than aggregate expenditures, the economy is in equilibrium. O there are decreases in inventory. O total output will decrease.
2. Consider the following IS-LM model: C = 200+ 0.25Ya I = 150+ 0.25Y - 1000i G = 250 T = 200 d M (1) MS = 3200 and P = 2 = 2Y - 8000i a. Derive the IS relation (Y in terms of i) C. Solve for equilibrium real output. b. Derive the LM relation (Y in terms of i)
LAS 100 90 X 80 70 110 60 0 320 360 below full-employment; 40 above full-employment; 20 below full-employment; 20 above full-employment; 40 actual; 0 SAS 400 440 480 520 Real GDP (billions of 2007 dollars) Figure 10.3.1 AD Refer to Figure 10.3.1. The economy is at its short-run macroeconomic equilibrium. There is a difference between equilibrium real GDP and potential GDP of $ billion.
Which of the following could potentially cause a recession? O AD increases, and wages are sticky. O AD increases, and wages are flexible. O AD falls, and wages are flexible. AD decreases, and wages are sticky.

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