Macroeconomics (Book Only)
12th Edition
ISBN: 9781285738314
Author: Roger A. Arnold
Publisher: Cengage Learning
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Chapter 8, Problem 2VQP
To determine
Illustrate the effect of decrease in wage rates and business taxes.
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Describe 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.
Illustrate graphically and interpret the change in equilibrium price and quantity using short-run Aggregate Demand and Supply curve when:
Prices of raw materials of suppliers increase.
The Federal Bank increases the interest rate.
Government decides to spend less on development of infrastructure of the country.
New skilled workers join the workforce.
Factories and plant got destroyed due to outbreak of fire.
The short-run quantity of output supplied by firms will exceed the natural level of output when the actual price level ———-that people expected.
Chapter 8 Solutions
Macroeconomics (Book Only)
Ch. 8.2 - Prob. 1STCh. 8.2 - Prob. 2STCh. 8.2 - Prob. 3STCh. 8.3 - Prob. 1STCh. 8.3 - Prob. 2STCh. 8.3 - Prob. 3STCh. 8.5 - Prob. 1STCh. 8.5 - Prob. 2STCh. 8 - Prob. 1VQPCh. 8 - Prob. 2VQP
Ch. 8 - Prob. 3VQPCh. 8 - Prob. 4VQPCh. 8 - Prob. 5VQPCh. 8 - Prob. 1QPCh. 8 - Prob. 2QPCh. 8 - Prob. 3QPCh. 8 - Prob. 4QPCh. 8 - Prob. 5QPCh. 8 - Prob. 6QPCh. 8 - Prob. 7QPCh. 8 - Prob. 8QPCh. 8 - Prob. 9QPCh. 8 - Prob. 10QPCh. 8 - Prob. 11QPCh. 8 - Prob. 12QPCh. 8 - Prob. 13QPCh. 8 - Prob. 14QPCh. 8 - Prob. 15QPCh. 8 - Prob. 16QPCh. 8 - Prob. 17QPCh. 8 - Prob. 18QPCh. 8 - Prob. 19QPCh. 8 - Prob. 20QPCh. 8 - Prob. 1WNGCh. 8 - Prob. 2WNGCh. 8 - Prob. 3WNGCh. 8 - Prob. 4WNG
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- The following table lists several determinants of aggregate supply. Fill in the table by indicating the changes in the determinants necessary to increase aggregate supply. Determinant Prices of Nonlabor Inputs Productivity Nominal Wage Rate Change Needed to Increase Short-Run Aggregate Supplyarrow_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. 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_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 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_forwardUse the following graph to answer the following questions. Line Y Price level (P) 100 80 B Line Z Line X2 Line X1 Real GDP (3) If point A occurs chronologically before point B, then this graph could represent a decrease in aggregate demand with a decrease in long-run and short-run aggregate supply. a decrease in aggregate demand with constant long-run and short-run aggregate supply. constant aggregate demand with a decline in long-run aggregate supply. an increase in aggregate demand with constant long-run and short-run aggregate supply. constant aggregate demand with a decline in short-run aggregate supply.arrow_forwardSuppose that the price index of 150 for quantity demanded of US Real GDP is 10.0 trillion worth of goods. Do these data represent aggregate demand or a point on an aggregate demand curve? Explain your answer.arrow_forward
- Determinants of aggregate demand The following graph shows a decrease in aggregate demand (AD) in a hypothetical country. Specifically, aggregate demand shifts to the left from AD1AD1 to AD2AD2, causing the quantity of output demanded to fall at all price levels. For example, at a price level of 140, output is now $200 billion, where previously it was $300 billion.arrow_forwardAre the determinants of aggregate demand the same things that apply to demand for an individual good?arrow_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_forward
- Consider the different characteristics of the aggregate demand curve and the short‑run aggregate supply curve. For each of the statements below, determine which curve is being described and place the description into the proper bin. Answer bank in image Aggregate demand Short‑run aggregate supplyarrow_forwardWhat 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_forwardare my answers correct?arrow_forward
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