
Identify the effect of the events on the quantity of real

Explanation of Solution
- The U.S firm move their call handling, IT, and data function to Country I:
A movement of call handling, IT, and data function from the U.D firm to Country I’s firm will cause an expansion of a business. In order to expand the business of the firm, it will result in demanding new capital, increase employment, and production. Therefore, the quantity of real GDP supplies and aggregate supply will increase.
Figure -1 shows the effect of movement of business from one firm to other firms as follows:
In Figure -1, the horizontal axis measures real GDP and the vertical axis measures
In Figure -1, the curve short-run aggregate supply (SAS), long-run
- Fuel price rise:
A rise in fuel price will result in an increase in the price level, which will rise the cost of production and temporarily decrease the aggregate supply. This will cause the short-run supply shift to the leftward direction and long-run aggregate supply curve remain unchanged.
Figure -2 shows the impact of rising in fuel price as follows:
In Figure -2, the horizontal axis measures real GDP and the vertical axis measures price level.
In Figure -2, point E represents the initial equilibrium of the economy. Since as the rise in price cause a temporary decrease in short-run aggregate supply, which result in short-run aggregate supply curve shift to the leftward direction. Therefore, point E1 represents the new equilibrium point and SAS1 is the new short-run aggregate supply curve.
- Walmart and Starbucks open in Country I:
The Walmart and Starbucks open in Country I, which causes an expansion of their business. In order to expend the business of the firm, which will result in demanding new capital, increased employment, and production. Therefore, the quantity of real GDP supplies and aggregate supply will increase.
Figure -3 shows the effect of the expansion of business from one country to another country as follows:
In Figure -3, the horizontal axis measures real GDP and the vertical axis measures price level.
In Figure -3, the curve short-run aggregate supply (SAS), long-run aggregate supply curve (LAS) at output Q represents the initial outcome of the economy. The result of the expansion of a business into one country to another country will cause an increase in long-run aggregate supply and short run aggregate supply and will result in a long-run aggregate supply curve (LAS1) and short-run aggregate supply curve (SAS1) shift to the rightward direction.
- Universities in the Country I increase the number of engineering graduates.
An increase in the number of engineering graduates in Country I will result in an increase in human capital and opportunity of employment expansion. Therefore, the quantity of real GDP supplies and aggregate supply will increase.
Figure -4 shows the effect of expansion of business from one country to another country as follows:
In Figure -4, the horizontal axis measures real GDP and the vertical axis measures price level.
In Figure -4, the curve short-run aggregate supply (SAS), long-run aggregate supply curve (LAS) at output Q represents the initial outcome of the economy. The result of an increase in the human capital and employment opportunity will cause an increase in long-run aggregate supply and short-run aggregate supply, which will result in a long-run aggregate supply curve (LAS1) and short-run aggregate supply curve (SAS1) shift to the rightward direction.
- The money wage rate rises:
An increase in the money wage rate causes an increase in the cost of production of the firm because with the existing employment rate, the firm will pay a high salary or wage for the same quantity of output. Therefore, there occur a temporarily decrease in the aggregate supply, which will cause the short-run supply to shift to the leftward direction and long-run aggregate supply curve remain unchanged.
Figure -5 shows the effect of a rise in the money wage rate as follows:
In Figure -5, the horizontal axis measures real GDP and the vertical axis measures price level.
In Figure -5, point E represents the initial equilibrium of the economy. Since as a rise in money wage rate causes a temporary decrease in short-run aggregate supply, which results in short-run aggregate supply curve shift to the leftward direction. Therefore, point E1 represents new equilibrium point and SAS1 is the new short-run aggregate supply curve.
- The price level in Country I increases:
In the short-run, an increase in the price level in the Country I cause an increase in the quantity supply of real GDP. Since an increase in price level causes an increase in the money wage rate, hence, in the long run, there occur an upward movement or real GDP along with long-run aggregate supply curve.
Figure -6 shows the impact of rise in the price level in Country I as follows:
In Figure -6, the horizontal axis measures real GDP and the vertical axis measures price level.
In Figure -6, a rising in the price level causes a rise in money wage rate, hence in the long-run, the quantity supplied of real GDP increases. Therefore, there occurs an upward movement along with the long-run aggregate supply curve and the short-run aggregate supply curve.
Want to see more full solutions like this?
Chapter 27 Solutions
EBK ECONOMICS
- Please help and Solve! (Note: this is a practice problem)arrow_forwardPlease help and thanks! (Note: This is a practice problem!)arrow_forwardUnit VI Assignment Instructions: This assignment has two parts. Answer the questions using the charts. Part 1: Firm 1 High Price Low Price High Price 8,8 0,10 Firm 2 Low Price 10,0 3,3 Question: For the above game, identify the Nash Equilibrium. Does Firm 1 have a dominant strategy? If so, what is it? Does Firm 2 have a dominant strategy? If so, what is it? Your response:arrow_forward
- not use ai please don't kdjdkdkfjnxncjcarrow_forwardAsk one question at a time. Keep questions specific and include all details. Need more help? Subject matter experts with PhDs and Masters are standing by 24/7 to answer your question.**arrow_forward1b. (5 pts) Under the 1990 Farm Bill and given the initial situation of a target price and marketing loan, indicate where the market price (MP), quantity supplied (QS) and demanded (QD), government stocks (GS), and Deficiency Payments (DP) and Marketing Loan Gains (MLG), if any, would be on the graph below. If applicable, indicate the price floor (PF) on the graph. TP $ NLR So Do Q/yrarrow_forward
- Now, let us assume that Brie has altruistic preferences. Her utility function is now given by: 1 UB (xA, YA, TB,YB) = (1/2) (2x+2y) + (2x+2y) What would her utility be at the endowment now? (Round off your answer to the nearest whole number.) 110arrow_forwardProblema 4 (20 puntos): Supongamos que tenemos un ingreso de $120 y enfrentamos los precios P₁ =6 y P₂ =4. Nuestra función de utilidad es: U(x1, x2) = x0.4x0.6 a) Planteen el problema de optimización y obtengan las condiciones de primer orden. b) Encuentren el consumo óptimo de x1 y x2. c) ¿Cómo cambiará nuestra elección óptima si el ingreso aumenta a $180?arrow_forwardPlease draw the graph for number 4 and 5, I appreciate it!!arrow_forward
- not use ai pleasearrow_forwardnot use ai pleasearrow_forward• Prismatic Cards: A prismatic card will be a card that counts as having every suit. We will denote, e.g., a prismatic Queen card by Q*. With this notation, 2.3045 Q would be a double flush since every card is a diamond and a heart. • Wild Cards: A wild card counts as having every suit and every denomination. Denote wild cards with a W; if there are multiple, we will denote them W₁, W2, etc. With this notation, W2 20.30054 would be both a three-of-a-kind (three 2's) and a flush (5 diamonds). If we add multiple wild cards to the deck, they count as distinct cards, so that (e.g.) the following two hands count as "different hands" when counting: W15 5Q and W255◊♡♡♣♣ In addition, 1. Let's start with the unmodified double-suited deck. (a) Call a hand a flush house if it is a flush and a full house, i.e. if all cards share a suit and there are 3 cards of one denomination and two of another. For example, 550. house. How many different flush house hands are there? 2. Suppose we add one wild…arrow_forward
- Macroeconomics: Private and Public Choice (MindTa...EconomicsISBN:9781305506756Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage LearningEconomics: Private and Public Choice (MindTap Cou...EconomicsISBN:9781305506725Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning
- Exploring EconomicsEconomicsISBN:9781544336329Author:Robert L. SextonPublisher:SAGE Publications, IncEconomics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning





