Economics (MindTap Course List)
13th Edition
ISBN: 9781337617383
Author: Roger A. Arnold
Publisher: Cengage Learning
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Question
Chapter 9, Problem 1WNG
(a)
To determine
Estimate the diagrammatic explanation for the long-run equilibrium.
(b)
To determine
Estimate the diagrammatic explanation for a recessionary gap.
(c)
To determine
Estimate the diagrammatic explanation for an inflationary gap.
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Chapter 9 Solutions
Economics (MindTap Course List)
Ch. 9.1 - Prob. 1STCh. 9.1 - Prob. 2STCh. 9.1 - Prob. 3STCh. 9.2 - Prob. 1STCh. 9.2 - Prob. 2STCh. 9.2 - Prob. 3STCh. 9.3 - Prob. 1STCh. 9.3 - Prob. 2STCh. 9.3 - Prob. 3STCh. 9 - Prob. 1QP
Ch. 9 - Prob. 2QPCh. 9 - Prob. 3QPCh. 9 - Prob. 4QPCh. 9 - Prob. 5QPCh. 9 - Prob. 6QPCh. 9 - Prob. 7QPCh. 9 - Prob. 8QPCh. 9 - Prob. 9QPCh. 9 - Prob. 10QPCh. 9 - Prob. 11QPCh. 9 - Prob. 12QPCh. 9 - Prob. 13QPCh. 9 - Prob. 14QPCh. 9 - Prob. 15QPCh. 9 - Prob. 16QPCh. 9 - Prob. 17QPCh. 9 - Prob. 18QPCh. 9 - Prob. 1WNGCh. 9 - Prob. 2WNGCh. 9 - Prob. 3WNGCh. 9 - Prob. 4WNGCh. 9 - Prob. 5WNGCh. 9 - Prob. 6WNGCh. 9 - Prob. 7WNG
Knowledge Booster
Similar questions
- Construct the AD, SRAS, and LRAS curves for an economy experiencing 1. full employment 2. an economic boom, 3. a recession. What will happen in each case if it's only temporary? What will happen in each case if it's permanent?arrow_forwardAn economy is at full employment. Which of the following events can create a recessionary gap? A.An increase in foreign income. B.An increase in government spending. C.An increase in taxes. D.A decrease in nominal wages.arrow_forwardAn economy is currently at point A in the graph below. Is this economy experiencing a recessionary gap or an inflationary gap? Explain why. type your text here Price Level LAS Real Output SAS ADarrow_forward
- Quèstion 15 What two solutions did Keynes suggest as appropriate government policies in order to close a recessionary gap? ( For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac). BIUS Paragraph 10pt Av Arial 三 = =三 x² X, 土 ABC 35 9 - 田arrow_forwardWhy did Keynes believe that the proper response to a period of recession was for the government to increase its spending? How could this policy help to combat recession? Use diagram.arrow_forwardDistinguish between inflationary and recessionary (deflationary) gaps? How do these gaps impact the economy?arrow_forward
- Use the AD - AS model in the figure below to answer the following questions. Suppose the economy is currently experiencing an inflationary gap, without any government policy intervention, the economy would move from ◻ a) C to D b) B to A c) C to B d) A to E e) E to Aarrow_forwardConsider the table on the right, which shows business investment in inventories for each quarter from the first quarter of 2007 to the first quarter of 2012, measured in millions of 2007 dollars. Provide a macroeconomic explanation for this pattern. (Hint: When did the recession during this period begin and end?) The negative growth of inventories indicates a period of OA. inflation since inventories needed to be reduced in the face of increasing storage cost OB. recession because demand was met by drawing down past inventories and production did not increase. OC. recovery since inventories needed to be used to meet demand. OD. recession because inventories increased due to lack of demand Year 2007 2008 2009 2010 2011 2012 2013 Quarter Q1 308889 Q2 Q3 Q4 R288828 Q1 Q2 Q3 Q4 Q1 228892889 Q2 Q3 Q4 Q1 Q2 Inventory Investment (millions of 2007 dollars) $3360 - 2822 15,570 19,644 6061 9512 11,856 4699 -2364 7779 -4807 - 4807 2663 2508 4841 -6805 8965 12,153 6462 2179 2061 7298 14,091 3875…arrow_forwardDescribe the differences between recessionary and inflationary gaps.arrow_forward
- Question 28 What two solutions did Keynes suggest as appropriate government policies in order to close a recessionary gap? For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac). BIUS Paragraph Arial 10pt 三v x' X2 I Te 9リ 2 田田田国 ABC 土 |arrow_forwardIn the Keynesian framework, which of the following events might cause a recession? Which might causeinflation? Sketch AD/AS diagrams to illustrate your answers.a. A large increase in the price of the homes people own.b. Rapid growth in the economy of a major trading partner.c. The development of a major new technology offers profitable opportunities for business.d. The interest rate rises.e. The good imported from a major trading partner become much less expensive.arrow_forwardWhat is the recessionary gap and inflationary gap? Explain the following concepts in detail. Use formulas or diagrams that could complete your description.arrow_forward
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