(a)
To explain:
The effect on aggregate
Answer to Problem 1P
When the export increases, the aggregate demand also increases.
Explanation of Solution
When the exports increases, it represents the increase in demand forgoods in the foreign market. Therefore, the increased demand leads to an increase in aggregate demand.
Aggregate demand:
It represents the total goods and services that are demanded at a given point of time. As the price level and
(b)
To explain:
The effect on aggregate demand, if both import and export decreases provided other thingsbeing equal.
Answer to Problem 1P
The effect will be intermediate on the aggregate demand, if both the exports and imports decreases.
Explanation of Solution
The aggregate demand increases with an increase in export while it decreases with the increase in import.In this case,both of them are decreasing.Thus, the change will depend upon the export or import whichever is more intense.
Aggregate demand:
It represents the total goods and services that are demanded at a given point of time. As the price level and gross domestic product demand share an inverse relationship, the demand curve slopes downwards when the price becomes high.
(c)
To explain:
The effect on aggregate demand, if consumption decreases provided other thingsbeing equal.
Answer to Problem 1P
The aggregate demand will increase with an increase in consumption.
Explanation of Solution
The aggregate demand will raise with the increase in consumption of goods and services. More will be the consumption of products, more will be the demand.
Aggregate demand:
It represents the total goods and services that are demanded at a given point of time. As the price level and gross domestic product demand share an inverse relationship, the demand curve slopes downwards when the price becomes high.
(d)
To explain:
The effect on aggregate demand, if investment increases provided other things being equal.
Answer to Problem 1P
The increase in investment will increase the aggregate demand.
Explanation of Solution
The aggregate demand will increase with the increase in investment in capital goods. Investment made in new technology, building new infrastructure, purchasing new machines would lead to an increase in the income of the people.Thus, the
Aggregate demand:
It represents the total goods and services that are demanded at a given point of time. As the price level and gross domestic product demand share an inverse relationship, the demand curve slopes downwards when the price becomes high.
(e)
To explain:
The effect on aggregate demand, if investment decreases and government purchase increase provided other thingsbeing equal.
Answer to Problem 1P
If the investment decreases and the government purchase increases, the effect on aggregate demand will be intermediate.
Explanation of Solution
The decrease in investment leads to fall in demand, whereas, the increase in government purchases lead to increase in demand.The change in aggregate demand will depend upon the intensity, accordingly the aggregate demand will shift towards left or right.
Aggregate demand:
It represents the total goods and services that are demanded at a given point of time. As the price level and gross domestic product demand share an inverse relationship, the demand curve slopes downwards when the price becomes high.
(f)
To explain:
The effect on aggregate demand, if the price increases provided other thingsbeing equal.
Answer to Problem 1P
If the price level increases, there will be a decrease in the aggregate demand.
Explanation of Solution
The increase intheprice level will decrease the purchasing power of the consumers. This will lead to fall in the value of currency, decreasing the aggregate demand.
Aggregate demand:
It represents the total goods and services that are demanded at a given point of time. As the price level and gross domestic product demand share an inverse relationship, the demand curve slopes downwards when the price becomes high.
(g)
To explain:
The effect on aggregate demand, if the price level decreases provided other thingsbeing equal.
Answer to Problem 1P
The aggregate demand will increase with a decrease in the price level.
Explanation of Solution
The decrease in the price level increases the purchasing power of the consumers.Thus, it will increase the demand forgoods and services.
Aggregate demand:
It represents the total goods and services that are demanded at a given point of time. As the price level and gross domestic product demand share an inverse relationship, the demand curve slopes downwards when the price becomes high.
Want to see more full solutions like this?
- Practice: Their labor forces are each capable of supplying four million hours per week that can be used to produce shorts, almonds, or some combination of the two. Country Shorts Almonds (Pairs per hour of labor) (Pounds per hour of labor) Everglades 4 16 Denali 5 10 Suppose that initially Denali uses 1 million hours of labor per week to produce shorts and 3 million hours per week to produce almonds, while Everglades uses 3 million hours of labor per week to produce shorts and 1 million hours per week to produce almonds. As a result, Everglades produces 12 million pairs of shorts and 16 million pounds of almonds, and Denali produces 5 million pairs of shorts and 30 million pounds of almonds. Assume there are no other countries willing to engage in trade, so, in the absence of trade between these two countries, each country consumes the amount of shorts and almonds it produces. Everglades's opportunity cost of producing 1 pair of shorts is4 pounds of…arrow_forwardQuestion #1. The Governor's budget Announcement from Decenbrer 2024. Review proposed resources for understanding the Governo's proposed FY25 Budget, provide a reflection focusing on initial thoughts and feeling on the prpposed budget for the state. Please provide APA citiatiion?arrow_forward#3. The Governor's Budget Announcement from December 2024. Review proposed resources for understanding the Governo's proposed FY25 Budget. Does the Governor's proposed budget impact the current Welfare State, Why or Why not?arrow_forward
- 3. Which is faster, red or green cars? You are a purchasing manager at a large car dealership in a busy urban area. You purchase on average 250 cars monthly for the dealership. People are buying new and used cars from your dealership regularly, and business is doing well. Most of your customers are average middle-income households, and they typically purchase bigger cars that are pricey. Your boss, Natalya, invited you for lunch to discuss the next big purchase in preparation for the big Summer sales event. While chatting about the business, Natalya told you the following: "While surfing social media today, I read a government report that says the economy is growing and inflation is rising. As the economy continues to grow due to an increase in consumption by consumers, the prices are expected to rise to a higher level than usual. The report also said that the increase in consumption has caused a shortage in the auto industry, which I think might be good for us (or bad, I don’t know.)…arrow_forward1. Homemade Lasagna and the Pursuit for Knowledge Your sister, Jamila, a newly appointed human resource manager at a fast-growing assisted living facility, was sitting with you at the dinner table. While you were enjoying a homemade Lasagna and watching TV together, a news report stated that "According to government officials, we are now headed into a recession that could last up to 10 months. The decline in economic activities is expected to affect all major industries." Your sister raised her eyebrows and showed an expression of confusion as she looked at you and stated, "Oh dear, what should I do now as an HR manager? My company is opening a large facility in a couple of months, and we need at least 60 people to run it. I oversee finding those people, but now I am afraid of doing so because it looks like the economy is in trouble. So, dear brother, help me understand a couple of things:" First, what on earth is a “recession”, and how does it affect the economy? Do things become…arrow_forwardConsider the simple discrete job search model that we studied in class. Only the unemployed can receive one offer per period from F(w) that is a uniform distribution on [0,2]. There is a constant probability of being laid off at the end of each period while employed. Assume that she can get a new offer right away when laid off. We want to understand the reservation wage, WR, in this model. Assume that u(c) = c. The parameters are a discount factor ẞ and an unemployment benefit b.R and show that T is contraction on [0, ∞). Explicitly state any additional assumptions that you may need.(Grading guide line: 5pt for the exact form of T, 10pt for showing contraction, and 5pt for stating correct assumptions.)< (b) Discuss why (a) is useful to understand the reservation wage wд in this economy.< (c) We write WR = WR (b,ẞ,λ) to reveal its dependence on (b,ẞ,λ). Show that 0 ≤ aWR дь OWR дл ≤1 and ≥0. What about ? awR ав State any additional assumptions that you may need.< (d) Briefly explain the…arrow_forward
- 3. Consider the market for paper. The process of producing paper creates pollution. Assume that the marginal damage function for pollution is given by: MDF = 3E where damages are measured in dollars and E is the level of emissions. Assume further that the function describing the marginal abatement cost of emissions is given by MAC 120-E where benefits are measured in dollars and E is the level of emissions. a. Graph the marginal damage function (MDF) and the marginal abatement cost function (MAC). b. What is the unregulated level of emissions Eu? What is the social welfare of this emissions level? c. Assume an existing emission quota limits emissions to E = 60. Show on the graph why this policy is inefficient. What is the deadweight loss caused by this policy?arrow_forwardshow written calculation for Barrow_forwardProblem 1: 1. If a stock is expected to pay an annual dividend of $20 forever, what is the approximate present value of the stock, given that the discount rate is 5%? 2. If a stock is expected to pay an annual dividend of $20 forever, what is the approximate present value of the stock, given that the discount rate is 8%? 3. If a stock is expected to pay an annual dividend of $20 this year, what is the approximate present value of the stock, given that the discount rate is 8% and dividends are expected to grow at a rate of 2% per year?arrow_forward
- d-farrow_forwardG please!arrow_forward4. Consider two polluting firms, with the marginal abatement costs of polluters 1 and 2, respectively, equal to MAC₁ = 20-E1 MAC2 = 12-E2 a. What is the unregulated level of pollution for each firm? b. Assume policymakers have decided to cut the level of pollution in half. The way they intend to accomplish this goal is to require both firms to cut their pollution in half. What are the total costs of abatement from the policy? And how are these costs distributed between the firms? c. Is this uniform quota on emissions across firms the most cost-effective manner in which to reduce emissions by 50%?arrow_forward
Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Principles of Economics 2eEconomicsISBN:9781947172364Author:Steven A. Greenlaw; David ShapiroPublisher:OpenStax
Macroeconomics: Private and Public Choice (MindTa...EconomicsISBN:9781305506756Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning