The relationship between the shape of aggregate supply curve and the effectiveness of monetary policy at changing real GDP .

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Answer 1

Question

Chapter 19, Problem 1VQP

To determine

The relationship between the shape of aggregate supply curve and the effectiveness of monetary policy at changing real GDP.

Expert Solution & Answer

Explanation of Solution

Figure 1 shows the aggregate demand and supply curve as follows:

Macroeconomics (Book Only), Chapter 19, Problem 1VQP

In Figure 1, the vertical axis measures the price and the horizontal axis measures the real GDP. The vertical line “AS” is the long-run aggregate supply curve and upward sloping curve “SRAS” is the short-run aggregate supply curve. The downward sloping curves are the aggregate demand curve. The expansionary monetary policy shifts the aggregate demand curve to the right (from AD1 to AD2). Thus, when the aggregate demand curve is vertical, the shifts in aggregate demand curve do not make any changes in real GDP and it is constant at Q1. If the short-run aggregate supply curve is sloping upward, the shift of aggregate demand curve increases the equilibrium of real GDP from Q1 to Q2.

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Answer 2

Question

Chapter 19, Problem 1VQP

To determine

The relationship between the shape of aggregate supply curve and the effectiveness of monetary policy at changing real GDP.

Expert Solution & Answer

Explanation of Solution

Figure 1 shows the aggregate demand and supply curve as follows:

Macroeconomics (Book Only), Chapter 19, Problem 1VQP

In Figure 1, the vertical axis measures the price and the horizontal axis measures the real GDP. The vertical line “AS” is the long-run aggregate supply curve and upward sloping curve “SRAS” is the short-run aggregate supply curve. The downward sloping curves are the aggregate demand curve. The expansionary monetary policy shifts the aggregate demand curve to the right (from AD1 to AD2). Thus, when the aggregate demand curve is vertical, the shifts in aggregate demand curve do not make any changes in real GDP and it is constant at Q1. If the short-run aggregate supply curve is sloping upward, the shift of aggregate demand curve increases the equilibrium of real GDP from Q1 to Q2.

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Answer 3

Question

Chapter 19, Problem 1VQP

To determine

The relationship between the shape of aggregate supply curve and the effectiveness of monetary policy at changing real GDP.

Expert Solution & Answer

Explanation of Solution

Figure 1 shows the aggregate demand and supply curve as follows:

Macroeconomics (Book Only), Chapter 19, Problem 1VQP

In Figure 1, the vertical axis measures the price and the horizontal axis measures the real GDP. The vertical line “AS” is the long-run aggregate supply curve and upward sloping curve “SRAS” is the short-run aggregate supply curve. The downward sloping curves are the aggregate demand curve. The expansionary monetary policy shifts the aggregate demand curve to the right (from AD1 to AD2). Thus, when the aggregate demand curve is vertical, the shifts in aggregate demand curve do not make any changes in real GDP and it is constant at Q1. If the short-run aggregate supply curve is sloping upward, the shift of aggregate demand curve increases the equilibrium of real GDP from Q1 to Q2.

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Answer 4

Question

Chapter 19, Problem 1VQP

To determine

The relationship between the shape of aggregate supply curve and the effectiveness of monetary policy at changing real GDP.

Expert Solution & Answer

Explanation of Solution

Figure 1 shows the aggregate demand and supply curve as follows:

Macroeconomics (Book Only), Chapter 19, Problem 1VQP

In Figure 1, the vertical axis measures the price and the horizontal axis measures the real GDP. The vertical line “AS” is the long-run aggregate supply curve and upward sloping curve “SRAS” is the short-run aggregate supply curve. The downward sloping curves are the aggregate demand curve. The expansionary monetary policy shifts the aggregate demand curve to the right (from AD1 to AD2). Thus, when the aggregate demand curve is vertical, the shifts in aggregate demand curve do not make any changes in real GDP and it is constant at Q1. If the short-run aggregate supply curve is sloping upward, the shift of aggregate demand curve increases the equilibrium of real GDP from Q1 to Q2.

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Answer 5

Chapter 19, Problem 1VQP

To determine

The relationship between the shape of aggregate supply curve and the effectiveness of monetary policy at changing real GDP.

Expert Solution & Answer

Explanation of Solution

Figure 1 shows the aggregate demand and supply curve as follows:

Macroeconomics (Book Only), Chapter 19, Problem 1VQP

In Figure 1, the vertical axis measures the price and the horizontal axis measures the real GDP. The vertical line “AS” is the long-run aggregate supply curve and upward sloping curve “SRAS” is the short-run aggregate supply curve. The downward sloping curves are the aggregate demand curve. The expansionary monetary policy shifts the aggregate demand curve to the right (from AD1 to AD2). Thus, when the aggregate demand curve is vertical, the shifts in aggregate demand curve do not make any changes in real GDP and it is constant at Q1. If the short-run aggregate supply curve is sloping upward, the shift of aggregate demand curve increases the equilibrium of real GDP from Q1 to Q2.

Answer 6

Chapter 19, Problem 1VQP

To determine

The relationship between the shape of aggregate supply curve and the effectiveness of monetary policy at changing real GDP.

Expert Solution & Answer

Explanation of Solution

Figure 1 shows the aggregate demand and supply curve as follows:

Macroeconomics (Book Only), Chapter 19, Problem 1VQP

In Figure 1, the vertical axis measures the price and the horizontal axis measures the real GDP. The vertical line “AS” is the long-run aggregate supply curve and upward sloping curve “SRAS” is the short-run aggregate supply curve. The downward sloping curves are the aggregate demand curve. The expansionary monetary policy shifts the aggregate demand curve to the right (from AD1 to AD2). Thus, when the aggregate demand curve is vertical, the shifts in aggregate demand curve do not make any changes in real GDP and it is constant at Q1. If the short-run aggregate supply curve is sloping upward, the shift of aggregate demand curve increases the equilibrium of real GDP from Q1 to Q2.

Answer 7

Chapter 19, Problem 1VQP

To determine

The relationship between the shape of aggregate supply curve and the effectiveness of monetary policy at changing real GDP.

Answer 8

Expert Solution & Answer

Explanation of Solution

Figure 1 shows the aggregate demand and supply curve as follows:

Macroeconomics (Book Only), Chapter 19, Problem 1VQP

In Figure 1, the vertical axis measures the price and the horizontal axis measures the real GDP. The vertical line “AS” is the long-run aggregate supply curve and upward sloping curve “SRAS” is the short-run aggregate supply curve. The downward sloping curves are the aggregate demand curve. The expansionary monetary policy shifts the aggregate demand curve to the right (from AD1 to AD2). Thus, when the aggregate demand curve is vertical, the shifts in aggregate demand curve do not make any changes in real GDP and it is constant at Q1. If the short-run aggregate supply curve is sloping upward, the shift of aggregate demand curve increases the equilibrium of real GDP from Q1 to Q2.