Essentials of Economics (MindTap Course List)
8th Edition
ISBN: 9781337091992
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 23, Problem 6PA
Sub part (a):
To determine
Why short run
Sub part (b):
To determine
Why short run aggregate supply curve is upward sloping.
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Assume that you live in a country that is a major importer of Russian oil. How will the Russian invasion of Ukraine and subsequent
international sanctions against Russian exports affect your nation.
a. What curve would shift first in an Aggregate Demand Aggregate Supply model for your country?
b. How would the aggregate price level and aggregate output level change in the short run?
What is this phenomenon called?
What effects would each of the following have on aggregate demand or aggregate supply? Justify your answer. In each case use a diagram to show the expected effects on the equilibrium price level and real output level in the economy. Assume that all other things remain constant and prices are inflexible downward.
(a) A reduction in interest rates at each price level
(b) A sizable increase in labor productivity.
(c) The nation’s currency appreciates against its major trading partners .
Assume that the long-run aggregate supply
curve is vertical at Y= 3,000 while the short-run
aggregate supply curve is horizontal at P = 1.0.
The aggregate demand curve is Y = 2(MIP) and
M = 1,500.
▪a. Is the economy is initially in long-run
equilibrium?what are the values of P and Y?
▪b. If M increases to 2,000, what are the new
short-run values of P and Y?
▪c. Once the economy adjusts to long-run
equilibrium at M = 2,000, what are P and Y?
Chapter 23 Solutions
Essentials of Economics (MindTap Course List)
Ch. 23.1 - Prob. 1QQCh. 23.2 - Prob. 2QQCh. 23.3 - Prob. 3QQCh. 23.4 - Prob. 4QQCh. 23.5 - Prob. 5QQCh. 23 - Prob. 1CQQCh. 23 - Prob. 2CQQCh. 23 - Prob. 3CQQCh. 23 - Prob. 4CQQCh. 23 - Prob. 5CQQ
Ch. 23 - Prob. 6CQQCh. 23 - Prob. 1QRCh. 23 - Prob. 2QRCh. 23 - Prob. 3QRCh. 23 - Prob. 4QRCh. 23 - Prob. 5QRCh. 23 - Prob. 6QRCh. 23 - Prob. 7QRCh. 23 - Prob. 1PACh. 23 - Prob. 2PACh. 23 - Prob. 3PACh. 23 - Prob. 4PACh. 23 - Prob. 5PACh. 23 - Prob. 6PACh. 23 - Prob. 7PACh. 23 - Prob. 8PACh. 23 - Prob. 9PACh. 23 - Prob. 10PA
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- Suppose the economy is in a situation of moderate unemployment, and then an exogenous increase of aggregate demand occurs. (Assume the aggregate demand schedule follows the pattern set out by the mainstream story.) Use short run aggregate supply and aggregate demand analysis to discuss in detail the effects of this demand change on the price level and real GDP in the short run. Explain how the situation could change in the long run after the happenings in the first part.arrow_forwardExplain what will happen as a result of the following events. In each case, draw an aggregate demand and short-run aggregate supply diagram showing the initial equilibrium output level (YO) and price level (PO). Show any changes, indicate the final equilibrium output level and price level and explain briefly. a. The economy is in a recession. An increase in government purchases occurs. The Fed tries to maintain the interest rate. b. The economy is operating near full capacity. Now environmental pollution standards are tightened substantially.arrow_forwardAnswer the following questions below a) What relationship does the aggregate demand curve show? b) What relationship does the short run aggregate supply curve show?arrow_forward
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