Principles of Economics
7th Edition
ISBN: 9781305156043
Author: N. Gregory Mankiw
Publisher: Cengage Learning US
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Chapter 33, Problem 7QR
To determine
Factors that cause the shifts in the aggregate supply curve .
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What happens to the output and price level if aggregate demand and aggregate supply curves shift in the same direction?
What effect would an increase in aggregate demand have on price level and GDP?
What factors shift the short-run aggregate supply curve?Do any of these factors shift the long-run aggregate supply curve? Why?
Chapter 33 Solutions
Principles of Economics
Ch. 33.1 - Prob. 1QQCh. 33.2 - Prob. 2QQCh. 33.3 - Prob. 3QQCh. 33.4 - Prob. 4QQCh. 33.5 - Prob. 5QQCh. 33 - Prob. 1QRCh. 33 - Prob. 2QRCh. 33 - Prob. 3QRCh. 33 - Prob. 4QRCh. 33 - Prob. 5QR
Ch. 33 - Prob. 6QRCh. 33 - Prob. 7QRCh. 33 - Prob. 1QCMCCh. 33 - Prob. 2QCMCCh. 33 - Prob. 3QCMCCh. 33 - Prob. 4QCMCCh. 33 - Prob. 5QCMCCh. 33 - Prob. 6QCMCCh. 33 - Prob. 1PACh. 33 - Prob. 2PACh. 33 - Prob. 3PACh. 33 - Prob. 4PACh. 33 - Prob. 5PACh. 33 - Prob. 6PACh. 33 - Prob. 7PACh. 33 - Prob. 8PACh. 33 - Prob. 9PACh. 33 - Prob. 10PA
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- What effects would increase in aggregate supply have on price levels and GDP?arrow_forwardUsing aggregate demand and aggregate supply, graph the effects on the price level and GDP of each of the following. Draw a large graph and label all axes, initial and final equilibrium points, direction of shift if any, all curves and lines, equilibrium values on the x- and y-axes. State the conclusion in words. a. A cut in income taxes b. An increase in military spending c. A drop in export demand by foreign purchasers d. An increase in imports e. A decline in business investment spendingarrow_forwardWhat effect will each shift have on price levels and quantities? Decrease in Aggregate Demand Decrease in Aggregate Supplyarrow_forward
- Define aggregate supply? Build your argument by drawing Short-run aggregate supply curve. And what factors will leads to a vertical Long-run aggregate supply curve?arrow_forwardAssume 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?arrow_forwardHow did the decline in U.S. home prices in 2006–2008 affect aggregate demand?arrow_forward
- The following event has occurred in the history of the United States: The world oil price rises sharply. Explain for event whether it changes short-run aggregate supply, long-run aggregate supply, aggregate demand, or some combination of them.arrow_forwardWhat 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 .arrow_forwardThe following events shift either aggregate demand, aggregate supply, both or neither. Using a diagram, illustrate the effect of the events on the economy. In particular, explain the effect of each event on price level, real GDP and equilibrium in the economy. A) A recent business survey reported that business confidence has declined. B) Government cuts the rate of personal income tax after a pandemic caused an economic slowdown. C) A recent flooding in a small rural region destroyed the potato crop.arrow_forward
- The following events shift either aggregate demand, aggregate supply, both or neither. Using a diagram, illustrate the effect of the events on the economy. In particular, explain the effect of each event on price level, real GDP and equilibrium in the economy. A) A recent business survey reported that business confidence has declined. B) Government cuts the rate of personal income tax after a pandemic caused an economic slowdown. C) A recent flooding in a small rural region destroyed the potato crop. D) A booming economy in a neighbouring country has drawn many working age people (and their families) to emigrate there in search of jobs and better life.arrow_forwardWhat are three factors that help explain the slope of the aggregate demand curve? What is the most important factor? Why?arrow_forwardIn your own words, explain why aggregate demand is inversely related to the price level. Why does the explanation for the inverse relationship between price and quantity demanded for the aggregate demand curve differ from that of a demand curve for a specific good?arrow_forward
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