Which of the following must be true in the long run? Production increases when prices increase. An increase in the price level reduces aggregate demand. The natural rate of unemployment is not affected by changes in production capacity. Full employment increases when price level decreases. Prices and wages are flexible.
Q: Suppose you are a skilled worker in America who makes barrels. This year you notice that more people…
A: This can be described as the concept that shows the graphical representation of which combination of…
Q: Suppose an economy is in long-run equilibrium when housing prices increase causing household wealth…
A: In the above diagram, due to an economy is in long-run equilibrium when housing prices increase…
Q: When prices for durable goods increase, firms can rapidly increase production to match demand. True…
A: Durable goods are tangible products or items that have a moderately lengthy lifespan and are…
Q: Which of the following would cause an increase in the price level in the long run? Choose one:A.…
A: Price level refers to the monetary value of a goods or services that is sold in the market. In a…
Q: Assume that, in the market for iron, all of the supply comes from iron mining firms, which own mines…
A: Assume that, in the market for iron, all of the supply comes from iron mining firms, which own mines…
Q: The aggregate supply curve for the long run is: Group of answer choices Represents potential output,…
A: Long-run:- The term "long-run" refers to the amount of time it takes for nominal wages and other…
Q: Which of the following changes will have the smallest impact on the aggregated demand in the…
A: Government Spending(G): Government spending refers to the expenditures made by the government on…
Q: Suppose advances in computer technology lead to a surge in worker productivity. In the long run,…
A: Worker productivity, also known as labor productivity, refers to the measure of the efficiency and…
Q: The long-run aggregate supply curve is vertical because the production possibilities curve is…
A: Aggregate supply curve is defined as the curve which shows the relationship between price level and…
Q: The mathematical representation of the technological relationship between inputs and national output…
A: Charles Cobb and Paul Douglas were the first economists to denote a mathematical representation of…
Q: (a) Suppose the natural rate of unemployment for the economy is 5 percent and the economy is…
A: Unemployment refers to the state of a person or individual who is actively looking for job or work…
Q: An increase in productivity will: Multiple Choice increase aggregate supply. Increase aggregate…
A: Labor productivity= total output / number of labor
Q: Variables typically included in a multivariate supply function (other than the price and quantity of…
A: (Since you have posted a question with multiple subparts, we will answer the first one for you. If…
Q: Assume that the United States economy is currently in a recession in a short-run equilibrium. Draw…
A: Assuming the economy of United States is currently in recession in a short run equilibrium.…
Q: Show the effect this shock has on the market for almonds by shifting the demand curve, supply curve,…
A: The following is a summarized response; however, for a more thorough explanation, refer to the next…
Q: Include correctly labeled diagrams, if useful or required, in explaining your answers. A correctly…
A: At the maximum level of output, the long-run aggregate supply curve is a vertical line. The long-run…
Q: Price Level AS P1 P2 AD - AD' Y2 Y1 Real National Income
A: In the United States, government make changes in its taxation and spending, according to the…
Q: Assume that Canada is initially in long run equilibrium. Discuss how each of the following four…
A: Hi student, Thanks for posting the question. As per the guideline, we are pr0viding the answer for…
Q: Suppose one family enjoys a monopoly in the market for Product X. The demand for Product X is P 140…
A: We know that firm achives equilibrium condition where MC= MR . Where firm makes maximum profit.
Q: The following events have occurred in the history of the United States: A deep recession hits the…
A: Deep recession will decline the economic activities in an economy which put negative impact on…
Q: How do people typically respond to higher real interest rates? by saving less by paying more taxes…
A: Since you have asked multiple questions, we will solve the first question for you. If you want any…
Q: In the short run, the quantity of output that firms supply can deviate from the natural level of…
A: Aggregate supply refers to the total output of goods and services that the firms are willing to sell…
Q: Which statements are true or false? S1: Investment in human capital is beneficial in the short run…
A: Economics as a subject deals with the allocation of scarce resources among humans with unlimited…
Q: When looking at Say's law, which of the following is true? The focus is on the short run. O Every…
A: According to Say's Law the supply generates its own demand. In the production process, sufficient…
Q: An increase in the price of an input will most likely? shift the demand to the left shift…
A: Shift in demand curve or supply curve usually happens because of other factors or say factor other…
Q: The low rate of inflation in the 1990s is probably due to Multiple Choice the fact that businesses…
A: In an economy, when talking about low inflation rate, it is the situation when economy is having…
Q: Assume prices and wages are flexible. Ceteris paribus, an increase in the supply of money will cause…
A: Classical dichotomy means that the real variable (eg. output) are not dependent on monetary…
Q: Lowering the corporate income taxes results in Increase in output and decrease in price in the short…
A: Corporation tax that is also known as corporate tax, is a direct tax placed on a corporation's net…
Q: A large reduction in oil prices will cause: Group of answer choices a leftward shift in the…
A: The relationship between aggregate price level and aggregate output demanded by all the people in…
Q: Suppose there are a negative demand shock and a positive supply shock in a perfectly competitive…
A: Equilibrium in the market is defined as a situation in which the quantity demanded of the good is…
Q: Suppose that exports fall. Which of the following describes how the economy will adjust on its own…
A: Answer: Correct option: (b) Explanation: Export is a component of aggregate demand. Due to a fall in…
Q: om the information provided, determine whether you are given an Aggregate Supply or Aggregate Demand…
A: Short-run aggregate supply (SRAS) is the relationship between the price level and the quantity of…
Q: Oil company cutbacks may raise gas prices down the road By slashing new investment and production,…
A: change in price can significantly impact the incentive to invest for a producer. In economics, the…
Q: Variables typically included in a multivariate supply function (other than the price and quantity of…
A: Disclaimer: Since you have posted questions with multiple sub-parts, we will solve the first three…
Q: Draw a supply and demand graph that represents the labor market. Now, assume that the economy is in…
A: To illustrate the labor market scenario you mentioned, we'll begin by drawing a labor market supply…
Q: Keynes and his followers believed that capitalism was one economic system that guaranteed full…
A: Changes in any component of spending—consumption, investment, or government spending—cause…
Q: Suppose that President Clinton has recently recommended that the U.S. should use some of the…
A: Disclaimer- “Since you have asked multiple questions, we will solve the first three questions for…
Q: Suppose we have a market with upward sloping supply and downward sloping demand curves. After which…
A: "shocks" alludes to surprising occasions that change the equilibrium in a market, frequently in the…
Q: Economists believe that the determines the price level in the long run. Money supply Money demand…
A: Central bank influence money supply by buying or selling the government securities.
Q: Suppose there are a positive demand shock and a negative supply shock in a perfectly competitive…
A: Equilibrium is where demand equals supply. Positive demand shock will lead to rightward shift in…
Q: The aggregate supply curve is upward sloping in the short-run because of the Profit effect…
A: Answer in step 2.
Which of the following must be true in the long run?
- Production increases when prices increase.
- An increase in the
price level reduces aggregate demand. - The natural rate of
unemployment is not affected by changes in production capacity. - Full employment increases when price level decreases.
- Prices and wages are flexible.
![](/static/compass_v2/shared-icons/check-mark.png)
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
- The aggregate supply curve is upward sloping in the short-run because of the Profit effect which says the rate of output will increase as the price level increases. Profit effect which says higher input costs will cause an increase in the rate of output. Cost effect which says the rate of output will increase if production costs increase. Cost effect which says higher input costs will cause an increase in the rate of inputs. Inflation effect which says that everything costs more because U.S. debt is so large.The following events have occurred in the history of the United States: A deep recession hits the world economy. The world oil price rises sharply. U.S. businesses expect future profits to fall. Explain the combined effects of these events on U.S. real GDP and the price level,starting from a position of long-run equilibrium.Researchers in an oil producing country discover a cost effective method using existing levels of capital and labour to extract large amounts of petroleum resources that were previously inaccessible. All else equal, which of the following will most likely occur. Select one: The long run aggregate supply curve will shift to the left The long run aggregate supply curve will shift to the right The aggregate demand curve will shift to the left The aggregate demand curve will shift to the right
- Economists believe that the determines the price level in the long run. Money supply Money demand Supply of government securities Demand for government securitiesAn increase in productivity will: Multiple Choice increase aggregate supply. increase aggregate supply and aggregate demand. decrease aggregate supply and aggregate demand. increase aggregate demand.Pessimism (suggestion: draw the AS-AD diagram to help your analysis and start with the long-run and short-run equilibrium, i.e. the intersection of LRAS, SRAS and AD curves) Suppose the economy is in long-run equilibrium. Then because of corporate scandal, international tensions, and loss of confidence in policymakers, people become pessimistic regarding the future and retain that level of pessimism for some time. Refer to Pessimism. How is the new long-run equilibrium different from the original one? O 1) both price and real GDP are higher. 2) both price and real GDP are lower. 3) the price level is the same and GDP is lower. 4) the price level is lower and real GDP is the same.
- The aggregate supply curve A) is a market supply curve. B) relates output with the price level. C) embodies the same logic that lies behind an individual firm's supply curve. D) is the sum of the individual supply curves in the economyFirm X, a leading manufacturer of rubber tires in country A, caters to almost one-third of the domestic tire market. The country was hit by a recession last year that caused the national output growth to be negative. Simon Reeds, the CEO of firm X, feels that these fluctuations in the business environment are short-lived and expects the economy to recover very soon. In spite of the recession, Simon feels that the firm can actually invest in expanding its facilities as it has sufficient cash flows to continue its operation during the crisis period. The firm's marketing head, Sandra Jones, counters this by saying that the firm is already losing sales due to the recession and they should not increase costs further by making large-scale investments in the present climate. Which of the following, if true, would support the CEO's claim? A. The government recently announced a plan to offer incentives to buyers in the car and household appliances market. B.…Firm X, a leading manufacturer of rubber tires in country A, caters to almost one-third of the domestic tire market. The country was hit by a recession last year that caused the national output growth to be negative. Simon Reeds, the CEO of firm X, feels that these fluctuations in the business environment are short-lived and expects the economy to recover very soon. In spite of the recession, Simon feels that the firm can actually invest in expanding its facilities as it has sufficient cash flows to continue its operation during the crisis period. The firm's marketing head, Sandra Jones, counters this by saying that the firm is already losing sales due to the recession and they should not increase costs further by making large-scale investments in the present climate. Which of the following, if true, would support the marketing head's claim? A. In the previous recession, a leading player in the hospitality sector had expanded its facilities but was unable…
- Full employment output is the level of output that firms in the economy supply when A- all capital is fully utilized B- the unemployment rate is zero C- taxes are zero D- consumption decreases and saving decreasesAn increase in the price level causes the aggregate supply curve to shift to another supply schedule. True or FalseThe following events have occurred in the history of the United States: A deep recession hits the world economy. The world oil price rises sharply. S. businesses expect future profits to fall. Explain the separate effects of each event on U.S. real GDP and the price level, starting from a position of long-run equilibrium.
![Economics (MindTap Course List)](https://www.bartleby.com/isbn_cover_images/9781337617383/9781337617383_smallCoverImage.gif)
![Macroeconomics](https://www.bartleby.com/isbn_cover_images/9781337617390/9781337617390_smallCoverImage.gif)
![Economics (MindTap Course List)](https://www.bartleby.com/isbn_cover_images/9781337617383/9781337617383_smallCoverImage.gif)
![Macroeconomics](https://www.bartleby.com/isbn_cover_images/9781337617390/9781337617390_smallCoverImage.gif)