QUESTION 3Figure 11.2 shows the relationship between the price level and real GDP. Suppose the economy is currently at e'. A leftward shift of theshort-run aggregate supply curve would return the economy to potential output at:Figure 11.2Price levelPotential outputLRASP₁P₂PsP08Q₂Q₁8SRASADAD*AD'RealGDP(trillions ofdollars)a. point e".b. a point higher than e".c. point e.d. a point between e" and e*.e. point e.mit to save and submit. Click Save All Answers to save all answers.Glose Winda

The total supply of goods and services produced in an economy in an aspect time period is called…

UESTION 3 Figure 11.2 shows the relationship between the price level and real GDP. Suppose the economy is currently at e'. A leftward shift of the short-run aggregate supply curve would return the economy to potential output at: Figure 11.2 Price level P₁ Pa P₂ Potential output LRAS 0 a a. point e". b. a point higher than e". c. point e. d. a point between e" and e*. e. point e. f d SRAS AD' AD AD* Real GDP(trillions of dollars)

UESTION 3 Figure 11.2 shows the relationship between the price level and real GDP. Suppose the economy is currently at e'. A leftward shift of the short-run aggregate supply curve would return the economy to potential output at: Figure 11.2 Price level P₁ Pa P₂ Potential output LRAS 0 a a. point e". b. a point higher than e". c. point e. d. a point between e" and e. e. point e. f d SRAS AD' AD AD Real GDP(trillions of dollars)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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6. Why the aggregate supply curve slopes upward in the short run In the short run, the quantity of output that firms supply can deviate from the natural level of output if the actual price level in the economy deviates from the expected price level. Several theories explain how this might happen. For example, the sticky-price theory asserts that the output prices of some goods and services adjust slowly to changes in the price level. Suppose firms announce the prices for their products in advance, based on an expected price level of 100 for the coming year. Many of the firms sell their goods through catalogs and face high costs of reprinting if they change prices. The actual price level turns out to be 90. Faced with high menu costs, the firms that rely on catalog sales choose not to adjust their prices. Sales from catalogs will v , and firms that rely on catalogs will respond by v the quantity of output they supply. If enough firms face high costs of adjusting prices, the unexpected…
4. Suppose that over a five-year period, nominal GDP increases by 5 percent while real GDP decreases by 5 percent. a. What has happened to the level of output of this economy during this five-year period? Explain your reasoning briefly. b. What has happened to the level of prices during this five-year period? Explain your reasoning briefly. c. Use an aggregate demand-aggregate supply graph to show shift(s) of curves that would lead to this result.
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Which of the following would cause the Aggregate Supply curve to move from AS to AS2 in the graph below? Price Level 150 140 130 120 110 100 90 80 70 60 0 5 10 15 Real GDP ($ billion) AS -AD-AS2 O A federal government increase in spending. O A general increase in energy and labor cost for businesses. O An increase in productivity. O A general decrease in labor cost for businesses. 20 25
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ans ences rations If in Year 1 the price level was 100 and real GDP was $20 trillion and in Year 2 the price level was 105 and real GDP was $21 billion, then the predominant change that occured in Year 2 was OA a decrease in aggregate demand. B. an increase (shift to the right) in short-run aggregate supply. OC. a decrease (shift to the left) in short-run aggregate supply OD. an increase in aggregate demand.
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The following graph shows aggregate demand and short-run aggregate supply. Price level 1.) Use the line drawing tool to show the effect of an adjustment of workers and firms to a higher than expected price level. Properly label this line. SRAS, 2.) Use the point drawing tool to show the new equilibrium price level and real GDP. Label this point 'B'. Carefully follow the instructions above, and only draw the required objects. A ADO
6. Why the aggregate supply curve slopes upward in the short run In the short run, the quantity of output that firms supply can deviate from the natural level of output if the actual price level in the economy deviates from the expected price level. Several theories explain how this might happen. For example, the sticky-price theory asserts that the output prices of some goods and services adjust slowly to changes in the price level. Suppose firms announce the prices for their products in advance, based on an expected price level of 100 for the coming year. Many of the firms sell their goods through catalogs and face high costs of reprinting if they change prices. The actual price level turns out to be 90. Faced with high menu costs, the firms that rely on catalog sales choose not to adjust their prices. Sales from catalogs will , and firms that rely on catalogs v will respond by v the quantity of output they supply. If enough firms face high costs of adjusting prices, the unexpected…
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