The effects of currency appreciation by using an aggregate supply -demand diagram.

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Answer 1

Question

Chapter 20, Problem 1TY

To determine

To Analyze: The effects of currency appreciation by using an aggregate supply-demand diagram.

Expert Solution & Answer

Explanation of Solution

The relationship between supply of quantity and cost of goods or services, when represented graphically, it is called a supply curve. The point at which the supplied quantity equals the demanded quantity, then that is called an equilibrium price and equilibrium quantity.

Below shown is the diagram that represents the appreciation of currency in an economy.

MACROECONOMICS, Chapter 20, Problem 1TY

In the above mentioned graph the real GDP is being represented by the x−axis and the price level is being represented by the y−axis . The demand curve D is sloping downwards and the supply curve S is sloping upwards. The equilibrium point is being represented by the intersection of the demand curve and the supply curve. With the appreciation of currency, there will be a decrease in net exports and hence a leftward shift in the aggregate demand curve. While at the same time, imports will cost cheaper because of which the aggregate supply curve shifts downwards from S to S1. Thus there will be a fall in the price equilibrium level from e to e1 whereby the output level and price level reduces.

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Exercise 5Consider the demand and supply functions for the notebooks market.QD=10,000−100pQS=900pa. Make a table with the corresponding supply and demand schedule.b. Draw the corresponding graph.c. Is it possible to find the price and quantity of equilibrium with the graph method? d. Find the price and quantity of equilibrium by solving the system of equations.

1. Consider the market supply curve which passes through the intercept and from which the marketequilibrium data is known, this is, the price and quantity of equilibrium PE=50 and QE=2000.a. Considering those two points, find the equation of the supply. b. Draw a graph for this equation. 2. Considering the previous supply line, determine if the following demand function corresponds to themarket demand equilibrium stated above. QD=.3000-2p.

Answer 2

Question

Chapter 20, Problem 1TY

To determine

To Analyze: The effects of currency appreciation by using an aggregate supply-demand diagram.

Expert Solution & Answer

Explanation of Solution

The relationship between supply of quantity and cost of goods or services, when represented graphically, it is called a supply curve. The point at which the supplied quantity equals the demanded quantity, then that is called an equilibrium price and equilibrium quantity.

Below shown is the diagram that represents the appreciation of currency in an economy.

MACROECONOMICS, Chapter 20, Problem 1TY

In the above mentioned graph the real GDP is being represented by the x−axis and the price level is being represented by the y−axis . The demand curve D is sloping downwards and the supply curve S is sloping upwards. The equilibrium point is being represented by the intersection of the demand curve and the supply curve. With the appreciation of currency, there will be a decrease in net exports and hence a leftward shift in the aggregate demand curve. While at the same time, imports will cost cheaper because of which the aggregate supply curve shifts downwards from S to S1. Thus there will be a fall in the price equilibrium level from e to e1 whereby the output level and price level reduces.

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Answer 3

Question

Chapter 20, Problem 1TY

To determine

To Analyze: The effects of currency appreciation by using an aggregate supply-demand diagram.

Expert Solution & Answer

Explanation of Solution

The relationship between supply of quantity and cost of goods or services, when represented graphically, it is called a supply curve. The point at which the supplied quantity equals the demanded quantity, then that is called an equilibrium price and equilibrium quantity.

Below shown is the diagram that represents the appreciation of currency in an economy.

MACROECONOMICS, Chapter 20, Problem 1TY

In the above mentioned graph the real GDP is being represented by the x−axis and the price level is being represented by the y−axis . The demand curve D is sloping downwards and the supply curve S is sloping upwards. The equilibrium point is being represented by the intersection of the demand curve and the supply curve. With the appreciation of currency, there will be a decrease in net exports and hence a leftward shift in the aggregate demand curve. While at the same time, imports will cost cheaper because of which the aggregate supply curve shifts downwards from S to S1. Thus there will be a fall in the price equilibrium level from e to e1 whereby the output level and price level reduces.

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Answer 4

Question

Chapter 20, Problem 1TY

To determine

To Analyze: The effects of currency appreciation by using an aggregate supply-demand diagram.

Expert Solution & Answer

Explanation of Solution

The relationship between supply of quantity and cost of goods or services, when represented graphically, it is called a supply curve. The point at which the supplied quantity equals the demanded quantity, then that is called an equilibrium price and equilibrium quantity.

Below shown is the diagram that represents the appreciation of currency in an economy.

MACROECONOMICS, Chapter 20, Problem 1TY

In the above mentioned graph the real GDP is being represented by the x−axis and the price level is being represented by the y−axis . The demand curve D is sloping downwards and the supply curve S is sloping upwards. The equilibrium point is being represented by the intersection of the demand curve and the supply curve. With the appreciation of currency, there will be a decrease in net exports and hence a leftward shift in the aggregate demand curve. While at the same time, imports will cost cheaper because of which the aggregate supply curve shifts downwards from S to S1. Thus there will be a fall in the price equilibrium level from e to e1 whereby the output level and price level reduces.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 20, Problem 1TY

To determine

To Analyze: The effects of currency appreciation by using an aggregate supply-demand diagram.

Expert Solution & Answer

Explanation of Solution

The relationship between supply of quantity and cost of goods or services, when represented graphically, it is called a supply curve. The point at which the supplied quantity equals the demanded quantity, then that is called an equilibrium price and equilibrium quantity.

Below shown is the diagram that represents the appreciation of currency in an economy.

MACROECONOMICS, Chapter 20, Problem 1TY

In the above mentioned graph the real GDP is being represented by the x−axis and the price level is being represented by the y−axis . The demand curve D is sloping downwards and the supply curve S is sloping upwards. The equilibrium point is being represented by the intersection of the demand curve and the supply curve. With the appreciation of currency, there will be a decrease in net exports and hence a leftward shift in the aggregate demand curve. While at the same time, imports will cost cheaper because of which the aggregate supply curve shifts downwards from S to S1. Thus there will be a fall in the price equilibrium level from e to e1 whereby the output level and price level reduces.

Answer 6

Chapter 20, Problem 1TY

To determine

To Analyze: The effects of currency appreciation by using an aggregate supply-demand diagram.

Expert Solution & Answer

Explanation of Solution

The relationship between supply of quantity and cost of goods or services, when represented graphically, it is called a supply curve. The point at which the supplied quantity equals the demanded quantity, then that is called an equilibrium price and equilibrium quantity.

Below shown is the diagram that represents the appreciation of currency in an economy.

MACROECONOMICS, Chapter 20, Problem 1TY

In the above mentioned graph the real GDP is being represented by the x−axis and the price level is being represented by the y−axis . The demand curve D is sloping downwards and the supply curve S is sloping upwards. The equilibrium point is being represented by the intersection of the demand curve and the supply curve. With the appreciation of currency, there will be a decrease in net exports and hence a leftward shift in the aggregate demand curve. While at the same time, imports will cost cheaper because of which the aggregate supply curve shifts downwards from S to S1. Thus there will be a fall in the price equilibrium level from e to e1 whereby the output level and price level reduces.

Answer 7

Chapter 20, Problem 1TY

To determine

To Analyze: The effects of currency appreciation by using an aggregate supply-demand diagram.

Answer 8

Expert Solution & Answer

Explanation of Solution

The relationship between supply of quantity and cost of goods or services, when represented graphically, it is called a supply curve. The point at which the supplied quantity equals the demanded quantity, then that is called an equilibrium price and equilibrium quantity.

Below shown is the diagram that represents the appreciation of currency in an economy.

MACROECONOMICS, Chapter 20, Problem 1TY

In the above mentioned graph the real GDP is being represented by the x−axis and the price level is being represented by the y−axis . The demand curve D is sloping downwards and the supply curve S is sloping upwards. The equilibrium point is being represented by the intersection of the demand curve and the supply curve. With the appreciation of currency, there will be a decrease in net exports and hence a leftward shift in the aggregate demand curve. While at the same time, imports will cost cheaper because of which the aggregate supply curve shifts downwards from S to S1. Thus there will be a fall in the price equilibrium level from e to e1 whereby the output level and price level reduces.