This will result in which of the following? to A shift the long-run aggregate supply curve to the right No effect on the long-run aggregate supply curve A shift the long-run aggregate supply curve to the left Left No shift In the following table, determine how each event affects the position of the long-run aggregate supply (L Disbt
This will result in which of the following? to A shift the long-run aggregate supply curve to the right No effect on the long-run aggregate supply curve A shift the long-run aggregate supply curve to the left Left No shift In the following table, determine how each event affects the position of the long-run aggregate supply (L Disbt
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:3. The slope and position of the long-run aggregate supply curve
Suppose the economy produces real GDP of $60 billion when unemployment is at its natural rate.
Use the purple points (diamond symbol) to plot the economy's long-run aggregate supply (LRAS) curve on the graph.
132
128
LRAS
124
120
116
112
108
104
100
10
20
30
40
50
60
70
80
OUTPUT (Billions of dollars)
Suppose the government passes a law that significantly increases the minimum wage. The policy will cause the natural rate of unemployment
to
This will result in which of the following?
PRICE LEVEL
Transcribed Image Text:120
116
112
108
104
100
10
20
30
40
50
60
70
80
OUTPUT (Billions of dollars)
Suppose the government passes a law that significantly increases the minimum wage. The policy will cause the natural rate of unemployment
to
. This will result in which of the following?
A shift the long-run aggregate supply curve to the right
No effect on the long-run aggregate supply curve
A shift the long-run aggregate supply curve to the left
Left
No shift
In the following table, determine how each event affects the position of the long-run aggregate supply (L
Right
Direction
Curve Shift
The government allows more immigration of working-age adults.
For environmental and safety reasons, the government requires that the country's nuclear
power plants be permanently shut down.
A natural disaster destroys a significant amount of the economy's production facilities.
PRICE LEVEL
Expert Solution
Step 1
The LRAS is a curve that shows the relationship b/w price(P) level and real GDP. This curve runs on the assumption that prices are flexible. In LRAS, the price(P) can change but the output(q) cannot because it shows the full-employment output(o/p).
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