The short-run aggregate supply curve shows:O What happens to the level of real GDP suppliers are willing and able to produce in an economy as the overall price level changes, during aperiod in which output prices can change but input prices are fixedO How firms respond to changes in interest ratesO The relationship between the price level and aggregate expenditureO What happens to output in an economy when the government spends more moneyWhich of the following are assumed to remain unchanged along a given short-run aggregate supply curve? Check all that apply.O Input pricesThe price levelO Institutions, such as patent laws and tax systemsReal GDPPotential output (also called the natural rate of real output) refers to:O The quantity of output that would be produced if every member of the labour force worked 40 hours per weekO The quantity of output produced when the prices of all inputs are allowed to fully adjustO The quantity of output produced at the intersection of the aggregate demand and aggregate supply curvesO The maximum possible output of an economy with no unemploymentComplete the following table by matching each definition to the appropriate economic time frame.Long RunDefinitionA period of time in which some input prices and wages are fixedA period of time in which all input prices and wages are renegotiatedShort Run

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The short-run aggregate supply curve shows: O What happens to the level of real GDP suppliers are willing and able to produce in an economy as the overall price level changes, during a period in which output prices can change but input prices are fixed O How firms respond to changes in interest rates O The relationship between the price level and aggregate expenditure O What happens to output in an economy when the government spends more money

The short-run aggregate supply curve shows: O What happens to the level of real GDP suppliers are willing and able to produce in an economy as the overall price level changes, during a period in which output prices can change but input prices are fixed O How firms respond to changes in interest rates O The relationship between the price level and aggregate expenditure O What happens to output in an economy when the government spends more money

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 Figure 10-7 LRAS SRAS₂ SRASO J H SRAS ADO Real GDP Refer to Figure 10-7. Starting from long-run equilibrium at point F, at which of the following points would short-run equilibrium occur following a drought in the Midwestern states? O al O b. F OC.G O d.H
D Question 8 When the government lowers income taxes, consumption is O stimulated; rightward shift of O stimulated; movement down along O reduced; leftward shift of O reduced; movement up along Question 9 An increase in the price of a nonlabor input such as oil will cause a movement up the SRAS curve. a leftward shift in the SRAS curve. a rightward shift in the SRAS curve. no change regarding the SRAS curve. , causing a the AD curve.
Supply, S Real Interest rate Demand Loanable funds (billions of dollars per year) Refer to the graph above. Which of the following situations would have caused the shift as shown in the graph? O Taxes are changed so that real interest income is taxed rather than nominal interest income An expected recession decreases the profitability of new investment O The government runs a budget deficit O Technological change increases the profitability of new investment
$ Which of the following would cause the Aggregate Supply curve to move from AS to AS2 in the graph below? fs Price Level 150 140 130 120 110 100 90 80 70 60 % 5 0 16 5 O A general increase in energy and labor cost for businesses. O A federal government increase in spending. t 6 10 15 Real GDP ($ billion) -AS-AD-AS2 2 fa lyi & 7 7 J * 20 8 8 num lk ( 25 (1¹) 9
With the passage of time, which of the following will help direct this economy in Figure 10-21 toward its potential long-run rate of output (e1 to E2)? Figure 10-21 Price Level ti LRAS E₂ SRAS, SRAS: AD₂ AD₁ Y, Y₁ Goods and Services (Real GDP) Output is initially less than long-run capacity O lower interest rates that will stimulate AD and lower resource prices that will increase SRAS O higher interest rates that will reduce aggregate demand and higher resource prices that will reduce SRAS lower interest rates and higher resource prices, both of which will stimulate aggregate demand O higher interest rates that will reduce SRAS and lower resource prices that will stimulate aggregate demand
Refer to Figure 12-3. Suppose the economy is at point C. If investment spending decreases in the economy, where will the eventual long-run equilibrium be? Figure 12-3 Price level (GDP deflator, 2000100) OA O O B C D LRAS SRAS, SRAS * AD₁ AD₂ 0 None of the above Real GDP (trillions of 2000 dollars)
10:35 PM A O 60 Aggregate Expenditures Schedule 50 Tools 40 C+1 Equilibrium 30 20 10 10 20 30 40 50 Real GDP (billions of dollars) Instructions: In part b, enter your answer as a whole number. In part c, round your answer to 1 decimal place. b. What is the equilibrium GDP for this country? billion c. What is the marginal propensity to consume for this country? Aggregate expenditures (billions of dollars)
When planned aggregate expenditure is less than real GDP, as in the diagram to the right, what happens to firms' inventories? OA. Inventories fall as firms increase output. O B. Inventories accumulate as firms increase production. O C. Inventories fall if production is not scaled back. O D. Inventories accumulate if production is not scaled back. Real Aggregate Expenditure, AE ($100 billions) 100- 90- 80- 60- 50- 40- 30- 20- 10- 'Y = AE 45° 10 20 30 40 50 60 70 80 90 100 Real GDP, Y ($100 billions)
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Note: Line segments will automatically connect the points. PRICE LEVEL (Billions of dollars) 200 160 120 0 80 160 240 REAL GDP (Index numbers) The equilibrium price level is 320 400 Initial AD The change in government spending the multiplier effect. SRAS New AD ✓, and the equilibrium level of real output is Suppose that the government spending increases by $16 billion and the expenditure multiplier in this economy is 5. On the previous graph, use the purple points (diamond symbols) to illustrate the effect of the increase in government spending on the aggregate demand (New AD) curve. the equilibrium level of real output by . The price level increase
In the Aggregate Expenditure framework, which of the following government policy choices offer a possible solution to inflationary pressures? (Check all that apply.) Select all that apply: a. A reduction in taxes for businesses that increase investment. Ob. A major decrease in what the government spends on healthcare. O c. A decrease in military spending. O d. A tax increase on consumer income.
Suppose that the aggregate demand and aggregate supply schedules for a hypothetical economy are as shown below: a. Use these sets of data to graph the aggregate demand and aggregate supply curves. What is the equilibrium price level and the equilibrium level of real output in this hypothetical economy? Is the equilibrium real output also necessarily the full-employment real output? Explain.b. Why will a price level of 150 not be an equilibrium price level in this economy? Why not 250?c. Suppose that buyers desire to purchase $200 billion of extra real output at each price level. Sketch in the new aggregate demand curve as AD1. What factors might cause this change in aggregate demand? What is the new equilibrium price level and level of real output?