Use the following figure to answer the next question.Price LevelASAD₂AD₁Y3Real GDPSuppose the economy is currently at full employment with aggregate demand curve AD2. A further increase in consumption and investment spending will causeCMultiple ChoicerawY₁ Y₂Ocost-push inflation, and the new equilibrium output will be more than Y2,O1!cost-push inflation, and the new equilibrium output will be less than Y2.Odemand-pull inflation, and the new equilibrium output will be less than Y2.demand-pull inflation, and the new equilibrium output will be more than Y2.@922-QWCa$%0554#3< Prev11 of 18Next >MacBook ProERTח6627&8* 00Y U619田FGHK0

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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 Select one: a. O to P. b. P to Q. c. P to O. R d. R to Q. 20 LRAS O P AD₂ QUANTITY OF OUTPUT Refer to Figure 33-2. If the economy is in short-run equilibrium at a point where it is experiencing a recession, then, in the long-run, without monetary or fiscal policy intervention, the equilibrium will move from SRAS, SRAS, AD
QUESTION 10 OB LRAS * Oc O None of the above. SRAS AD In the graph above, an economy moves from point A to B after being hit by a shock, if the Central Bank takes action to keep the unemployment rate at its natural level, where will the economy move to? OA Real GDP
3
Use the figure to answer the following questions. Assume that the economy initially is operating at price level 120 and real output level $870. This output level is the economy’s potential (full-employment) level of output. Next, suppose that the price level rises from 120 to 130.
12. Increase in the aggregate demand and long-run aggregate supply curves Consider the dynamic aggregate demand and aggregate supply diagram for a hypothetical economy. Between 2021 and 2022, the aggregate demand curve (AD) shifts from AD₁ to AD2, the short-run aggregate supply curve (SRAS) shifts from SRAS, to SRAS2, and the long-run aggregate supply curve (LRAS) shifts from LRAS, to LRAS2. PRICE LEVEL (CPI) 110 106 LRAS, AD₁ LRAS The inflation rate between 2021 and 2022 is SRAS, 6.6 REAL GDP (Trillions of dollars) 6.8 SRAS2 AD₂2 The growth rate of full-employment output between 2021 and 2022 is (?) Which of the following best explains the economic developments from 2021 to 2022? O The economy operated at full-employment output in 2021, but the subsequent increase in aggregate demand was not enough to restore the economy to full-employment output, leading to a recessionary gap in 2022. O A strong increase in aggregate demand allowed the economy to grow out of a recessionary gap in…
Price level AD AD Real GDP FIGURE 23-4 Refer to Figure 23-4. Suppose the Canadian economy is initially in equilibrium at point A. An unexpected shock then shifts both the AD and the AS curves as shown and results in a new equilibrium represented by point B. Which of the following events could cause such a shock? Select one: O A. a decrease in the world price of oil O B. an increase in the net tax rate O C. an increase in factor prices O D. a decrease in firms' desired investment experiditures a decrease in labour productivity
Figure 10.3 P AS2 P2 P1 AD: Y2 Which of the following is not true in Figure 10.3: O The economy is going through a stagflationary period O The cost of crude oil has increased Output is stagnating, while inflation is increasing O Offshore wind farms are delivering cheap energy
Price Level 0 A B Real GDP Comparing points A and B on this graph, which of the following is true? O At point B, there would be less employment and higher unemployment than at point A. O At point B, there would be a lower wage than at point A. O At point B, there is a higher price level that increases the quantity of real GDP supplied. O At point A, there is greater pressure on the price level and inflation than at point B. O At point A, with a lower wage rate, aggregate supply has decreased compared to point B.
Please help solve.
Beginning at long-run equilibrium in the dynamic model of aggregate demand and aggregate supply, if the central bank permanently reduces its inflation target, then in the first period after the policy change, the dynamic aggregate supply (DAS) curve and the dynamic aggregate demand (DAD) curve a. shifts upward; shifts rightward O b. does not shift; shifts leftward C. does not shift; does not shift d. shifts downward; shifts leftward
Consider the figure to the right. If this country's government decides to increase its short-term spending, what happens to the short-run equilibrium price level, and why? Is this an example of demand-pull or cost-push inflation? Explain. 1.) Using the line drawing tool, draw either a new aggregate demand (AD) curve or a new short-run aggregate supply (AS) curve that shows the effects of temporary government spending increases. Properly label your line. 2.) Using the point drawing tool, indicate the economy's new short-run equilibrium price and level of real GDP. Label this point 'E₂.' Carefully follow the instructions above, and only draw the required objects. Price Level LRAS₁ Real GDP per Year (S trillions) AS₁ AD₁
The figure to the right shows an economy in a short-run equilibrium at point A Using the three-point curved line drawing tool, illustrate cost-push inflation. Properly label this curve Note: Carefully follow the instructions above and only draw the required object. Which of the following is most likely to cause the cost shock that shifts the AS curve consistent with cost-push inflation? A. A surge in the price of crude oil. OB. A tax increase on households. OC. An increase in the size of government. OD. A flood of new immigrants. Price level, Pa AD₂ Yo Aggregate output (income), Y AS du

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