Principles of Economics, 7th Edition (MindTap Course List)
7th Edition
ISBN: 9781285165875
Author: N. Gregory Mankiw
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 33, Problem 9PA
Sub part (a):
To determine
Short run and long run effects of economic events on output and price.
Sub part (b):
To determine
Short run and long run effects of economic events on output and price.
Sub part (c):
To determine
Short run and long run effects of economic events on output and price.
Sub part (d):
To determine
Short run and long run effects of economic events on output and price.
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
For each of the following scenarios predict how the price level and output will change over time from immediate impact to long-run impact. In each case, consider an economy that was initially producing at its level of potential output.
a. The government passes legislation that increases corporate taxes by 25%.
b. Economies around the globe are experiencing a time of prosperity and, as a result, demand for U.S. exports increases.
Using 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 spending
How do people typically respond to higher real interest rates?
by saving less
by paying more taxes
by saving more
by consuming more
Chapter 33 Solutions
Principles of Economics, 7th Edition (MindTap Course List)
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
Knowledge Booster
Similar questions
- Suppose the people of Canada has reduced their spending on goods and services from the United States. What will be the effect on real GDP and the price level in the short run? In the long run? Show your results graphically.arrow_forwardWhich of the following is likely to result from a rapid rise in aggregate demand? Select one: a. Static living standards b. Increased unemployment c. Rising prices d. Surplus on the balance of paymentsarrow_forwardIf households decide to save a larger portion of their income, what effect would this have on the output, employment, and price level in the short run? What about the long run?arrow_forward
- What happens when firms and workers underestimate future prices in the economy? Explain the answer while focusing on what would happen to actual output as opposed to the expected potential output.arrow_forwardIn the long-run, aggregate supply is a horizontal line at the long-run price level people can afford. True False One reason for why the aggregate demand curve slopes down is the wealth effect, which means that a higher price level leads to lower real wealth and, thereby, reduces the level of consumption. True Falsearrow_forwardPrice Level à AD and AS in the United States LRAS Y' Real GDP AS AD Tools New Curvearrow_forward
- The diagram below shows various points on three aggregate demand (AD) curves. A decrease in the price level will produce a movement between which of the following two points on the diagram above? From point X to point Y From point W to point Y From point W to point Z From point Z to point Y From point Y to point Zarrow_forwardWhen does macroeconomic equilibrium occur? Multiple Choice When exports equal imports. When the aggregate supply equals the long-run Aggregate Supply When the aggregate demand equals the long-run Aggregate Supply. When the aggregate quantity demanded is equal to the aggregate quantity supplied.arrow_forwardThe Canadian government increases its expenditure on goods and services in a time of war or increased international tension, Starting from a position of long-run equilibrium, what effect does this event have on Canada's economy in the short run? Real GDP increases and the price level rises. Real GDP decreases and the price level falls. Real GDP increases and the price level falls. Real GDP decreases and the price level risek There is no change in either real GDP or the price level. O000arrow_forward
- Which of the following is likely to occur if an increase in legal immigrants significantly reduces the wages of workers, ceteris paribus? A. Aggregate supply will decrease (shift left). B. Aggregate supply will increase (shift right). C. Aggregate demand will increase (shift right). D. Aggregate demand will decrease (shift left).arrow_forward10-8. Assume that the position of a nation's aggregate demand curve has not changed, but the long-run equilibrium price level has declined. Other things being equal, which of the following factors might account for this event? a. An increase in labor productivity b. A decrease in the capital stock c. A decrease in the quantity of money in circulation d. The discovery of new mineral resources used to produce various goods e. A technological improvementarrow_forwardWhich of the following statements best describes the aggregate supply curve? A) The aggregate supply curve represents the relationship between the price level and the total output or real GDP in the macroeconomy. B) The aggregate supply curve represents the relationship between the inflation rate and the total output or real GDP in the macroeconomy. C) The aggregate supply curve represents the relationship between the inflation rate and the total demand or real GDP in the macroeconomy. D) The aggregate supply curve represents the relationship between the price level and the potential output or GDP in the macroeconomy.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Macroeconomics: Private and Public Choice (MindTa...EconomicsISBN:9781305506756Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning
Macroeconomics: Private and Public Choice (MindTa...
Economics
ISBN:9781305506756
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning