The short-run economic outcome resulting from the increase in production costs is known as——-Suppose now that the government immediately pursues an accommodative policy by increasing government purchases in response to the short-run impact of the higher oil prices.In the long run, given that the government pursues accommodative policy, the output level in the economy will equal ——- level will equal——— Homework (Ch 33)9. Economic Tiuctuations IIThe following graph shows the aggregate demand curve (AD), the short-run aggregate supply curve (AS), and the long-run aggregate supply curve(LRAS) for a hypothetical economy. Initially, the expected price level equals the actual price level, and the economy experiences long-run equilibriumat a natural level of output of $100 billion.Suppose war in the world's main oil-producing region sharply reduces the world oil supply, causing oil prices to rise and increasing the costs ofproducing goods and services.Use the graph to help you answer the questions about the short-run and long-run effects of the increase in production costs that follow. (Note: Youwill not be graded on any adjustments made to the graph.)Hint: For simplicity, ignore any possible impact of the higher oil prices on the natural level of output.120115110LRASAS3hp1940AD0 US Homework (Ch 33)PRICE LEVEL120115110 +105 +10095908580→8085LRAS9095100105OUTPUT (Billions of dollars)ASAD1101151201AD-ASLRASThe short-run economic outcome resulting from the increase in production costs is known as0

The aggregate demand curve illustrates how the quantity of aggregate output demanded by households,…

Answered: The short-run economic outcome…

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter26: The Neoclassical Perspective

Section: Chapter Questions

Problem 21P: Use Table 26.3 to answer the following questions. Sketch an aggregate supply and aggregate demand...

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The short-run economic outcome resulting from the increase in production costs is known as——- Suppose now that the government immediately pursues an accommodative policy by increasing government purchases in response to the short-run impact of the higher oil prices. In the long run, given that the government pursues accommodative policy, the output level in the economy will equal ——- level will equal———

Homework (Ch 33)
9. Economic Tiuctuations II
The following graph shows the aggregate demand curve (AD), the short-run aggregate supply curve (AS), and the long-run aggregate supply curve
(LRAS) for a hypothetical economy. Initially, the expected price level equals the actual price level, and the economy experiences long-run equilibrium
at a natural level of output of $100 billion.
Suppose war in the world's main oil-producing region sharply reduces the world oil supply, causing oil prices to rise and increasing the costs of
producing goods and services.
Use the graph to help you answer the questions about the short-run and long-run effects of the increase in production costs that follow. (Note: You
will not be graded on any adjustments made to the graph.)
Hint: For simplicity, ignore any possible impact of the higher oil prices on the natural level of output.
120
115
110
LRAS
AS
3
hp
1940
AD
0 US

Homework (Ch 33)
PRICE LEVEL
120
115
110 +
105 +
100
95
90
85
80
→
80
85
LRAS
90
95
100
105
OUTPUT (Billions of dollars)
AS
AD
110
115
120
1
AD
-
AS
LRAS
The short-run economic outcome resulting from the increase in production costs is known as
0

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