Macroeconomics (MindTap Course List)
10th Edition
ISBN: 9781285859477
Author: William Boyes, Michael Melvin
Publisher: Cengage Learning
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Question
Chapter 8, Problem 11E
To determine
(a)
To write:
The impact on
To determine
(b)
To write:
The impact on equilibrium price and real GDP level when there is increase in aggregate demand and decrease in aggregate supply.
To determine
(c)
To write:
The impact on equilibrium price and real GDP level when both aggregate demand and aggregate supply decrease.
To determine
(d)
To write:
The impact on equilibrium price and real GDP when there is a decrease in aggregate demand and increase in aggregate supply.
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Chapter 8 Solutions
Macroeconomics (MindTap Course List)
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Similar questions
- The curve of Aggregate Demand or aggregate demand has a negative slope. Explain why the aggregate demand curve can have a negative slope.arrow_forwardIf the price level rises and the money wage rate rises by the same percentage, what happens to the quantity of real GDP supplied? Along which aggregate supply curve does the economy move?arrow_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
- Are the determinants of aggregate demand the same things that apply to demand for an individual good?arrow_forwardOther things equal, what effects would each of the following have on aggregate demand or aggregate supply? In each case use a diagram to show the expectedeffects on the equilibrium price level and the level ofreal output.a. A reduction in the economy’s real interest rate.b. A major increase in federal spending for healthcare (with no increase in taxes).c. The complete disintegration of OPEC, causing oilprices to fall by one-half. d. A 10 percent reduction in personal income taxrates (with no change in government spending).e. A sizable increase in labor productivity (with nochange in nominal wages).f. A 12 percent increase in nominal wages (with nochange in productivity).g. A sizable depreciation in the international value ofthe dollar.arrow_forwardIf the government announces a decrease in spending with an increase in taxes, which of the following would most likely occur? a. a leftward shift of the aggregate demand curve b. a rightward shift of the aggregate demand curve c. an upward movement along the aggregate demand curve d. a downward movement along the aggregate demand curve e. no change in the aggregate demand curve as well as no movement along itarrow_forward
- What kind of change would happen to aggregate demand, aggregate supply, and real GDP. if foreign countries purchase an unusually large number of U. S. manufactured passenger and military airplanes.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_forward1) Define aggregate demand and aggregate supply. 2) Give three reasons why the aggregate demand curve slopes downward. 3) Give three reasons why the aggregate supply curve slopes upwards.arrow_forward
- What would be the effect of an unexpected increase in the price of oil on a graph showing aggregate demand and short-run aggregate supply that is initially in equilibrium? The effect of an unexpected increase in the price of oil will be for the A. aggregate demand curve to shift down. B. aggregate demand curve to shift up. C. short-run aggregate supply curve to shift up. D. short-run aggregate supply curve to shift down. The new equilibrium will be where A. the new short-run aggregate supply curve interects the original aggregate demand curve. B. the original short-run aggregate supply curve interects the original aggregate demand curve. C. the new short-run aggregate supply curve interects the original short-run aggregate supply curve. D. the new short-run aggregate supply curve interects a new aggregate demand curve.arrow_forwardDescribe the change in aggregate supply that should result from each of the following changes in determinants. Assume that nothing else is changing besides the identified change. (In your answer, indicate whether the change will "Decrease" or "Increase" aggregate supply or have no effect.) (a) A rise in the average price of inputs; (b) An increase in worker productivity; (c) Government antipollution regulations become stricter; (d) A new subsidy program is enacted for new business investment in productive equipment; (e) Energy prices decline.arrow_forward8. Do the following events have their initial impact on aggregate demand, long run aggregate supply, or short run aggregate supply? Do the curves shift to the right or to the left? Show, using a graph for each question. a. The new government in Canada increases income taxes. AD/AS/LRAS: Equilibrium Price: Equilibrium Quantity: b. There has been an increase in investment in postsecondary education in Canada AD/AS/LRAS: Equilibrium Price: Equilibrium Quantity: c. Canada experiences downward pressure on nominal wages. AD/AS/LRAS: Equilibrium Price:, Equilibrium Quantity: 9 6arrow_forward
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