Describe the potential output.

Question

Want to see the full answer?

Answer 1

Question

Chapter 12, Problem 3RQ

To determine

Describe the potential output.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

With lockdowns currently imposed across Europe and North America until mid-April, even in the best-case scenario it will take at least until mid-June for market confidence to be restored in these economies. The implication is that nearly six million workers in Bangladesh’s formal sector – which is largely manufacturing – will be without steady work for an extended period.” a) Which part of the production function do you think the issue mentioned above will affect? Draw two diagrams to show Real GDP and LRAS is affected in the long run. The government should also consider an unconditional cash transfer program for an initial period of three months at a rate of $95 per month, which corresponds to the minimum wage for the formal sector in Bangladesh. This would cost the government roughly $14 billion, or 4% of GDP. While this sort of cash transfer program always suffers from targeting issues, Bangladesh enjoys a highly sophisticated mobile financial services network, which could…

Assume that GBP|USD = 2.00 (rate chosen for math ease). After the passage of a significant tax increase in the United States, the United States stock market is expected to drop significantly over the next month while the British stock market is expected to show steady growth. As a result which of following is most likely in a graph of the currency market with GBP per USD (original equilibrium is USD|GPB = 0.50) on the vertical axis (quantity of USD on horizontal axis)? Drawing a diagram would be useful. A. The supply curve would shift left and the new price would be greater than 0.50. B. The supply curve would shift right and the new price would be greater than 0.50. C. The supply curve would shift left and the new price would be less than 0.50. D. The supply curve would shift right and the new price would be less than 0.50.

Your Policy Brief team has modelled the effects of an investment in Research & Development (R&D) that leads to the invention of a new production method which makes more efficient use of renewable energy sources. This new production method can be disseminated throughout the economy, bringing down production costs for businesses, and enabling the economy to make more productive use of existing resources. This brings an expansion in the economy’s productive capacity. Illustrate the predicted effects of this innovation using an AD-AS diagram. Provide bullet points to explain what is happening in your diagram. As with all of your diagrams, be sure to indicate the original and new equilibrium points, and what happens to output and price level. To conclude your explanation, explain what the link between innovation and economic prosperity and wellbeing is.