The U.S. economy is at full employment when the world oil price falls. On an AS-AD graph, show the effect of the world oil price fall on the U.S. macroeconomic equilibrium in the short run. Explain the adjustment process that restores the economy to full employment. The graph shows the U.S. economy at a full-employment equilibrium. Draw a curve to show the effect of a fall in the world price of oil. Label it either AD, for a new AD curve or AS, for a new AS curve. Draw a point at the new short-run macroeconomic equilibrium. Along the adjustment path back to full employment with no change in monetary policy or fiscal policy, the money wage rate will and aggregate O A. fall; supply will increase O B. fall; demand will increase O C. rise; demand will decrease O D. rise; supply will decrease (

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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The U.S. economy is at full employment when the world oil price falls.
On an AS-AD graph, show the effect of the world oil price fall on the U.S.
macroeconomic equilibrium in the short run.
Explain the adjustment process that restores the economy to full employment.
The graph shows the U.S. economy at a full-employment equilibrium.
Draw a curve to show the effect of a fall in the world price of oil. Label it either AD, for a
new AD curve or AS, for a new AS curve.
Draw a point at the new short-run macroeconomic equilibrium.
Along the adjustment path back to full employment with no change in monetary policy or
fiscal policy, the money wage rate will
and aggregate
O A. fall; supply will increase
O B. fall; demand will increase
O C. rise; demand will decrease
O D. rise; supply will decrease
150-
140-
130-
120-
110+
100-
90-
80-
70-
Price level (GDP price index, 2012=100)
Potential GDP
110
20
18
ADO
ASO
19
20
21
Real GDP (billions of 2012 dollars)
>>> Draw only the objects specified in the question.
Transcribed Image Text:The U.S. economy is at full employment when the world oil price falls. On an AS-AD graph, show the effect of the world oil price fall on the U.S. macroeconomic equilibrium in the short run. Explain the adjustment process that restores the economy to full employment. The graph shows the U.S. economy at a full-employment equilibrium. Draw a curve to show the effect of a fall in the world price of oil. Label it either AD, for a new AD curve or AS, for a new AS curve. Draw a point at the new short-run macroeconomic equilibrium. Along the adjustment path back to full employment with no change in monetary policy or fiscal policy, the money wage rate will and aggregate O A. fall; supply will increase O B. fall; demand will increase O C. rise; demand will decrease O D. rise; supply will decrease 150- 140- 130- 120- 110+ 100- 90- 80- 70- Price level (GDP price index, 2012=100) Potential GDP 110 20 18 ADO ASO 19 20 21 Real GDP (billions of 2012 dollars) >>> Draw only the objects specified in the question.
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