Economics: Private and Public Choice
16th Edition
ISBN: 9781337642224
Author: James D. Gwartney; Richard L. Stroup; Russell S. Sobel
Publisher: Cengage Learning US
expand_more
expand_more
format_list_bulleted
Question
Chapter 9, Problem 7CQ
To determine
Explain the reason why it is possible for the economy to temporarily achieve output levels beyond the long-run potential level.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Suppose that an economy wants to boost available labor hours in order to increase aggregate supply. What is the best way to accomplish this?
Are all prices in the economy equally inflexible? Which ones show large amounts of short-run flexibility?
Suppose the government undertakes a large spending program to build community colleges and to make higher education free for many low-income families. How would you expect the program to affect output in the short run? Assuming that the program succeeds in increasing the skills of some workers, how would you expect it to output in the long run?
Chapter 9 Solutions
Economics: Private and Public Choice
Knowledge Booster
Similar questions
- if actual real GDP is greater than the equilibrium level of real gdp what happens to restore equilibrium to the economy?arrow_forwardWhat 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_forwardConsider the long-run equilibrium output, the potential output, the full-employment output, and the natural rate of output. Are their output levels the same or different?arrow_forward
- If 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_forwardSuppose the economy is operating at potential GDP when it experiences an increase in export demand. How might the economy increase production of exports to meet this demand, given that the economy is already at full employment?arrow_forwardplease give me correct answer and full explanationarrow_forward
- Assume a country would like to increase investment by limiting consumption. What would be the point of a policy like that? What would be the impact on the economy? Who would benefit? Who would lose out?arrow_forwardLRAS, LRAS₂2 A. B. C. D. E. A B C E D LL AD₁ SRAS₁ W SRAS2 AD2 Real GDP (Y) Based on the figure, which of the following would cause the long-run equilibrium point to change from point B to point D? The population has aged and there are fewer people in the labor force. Firms and workers expected the price level to rise. The economy experienced an increase in government spending. The economy was in an expansion and has adjusted. The country's overall productivity increased.arrow_forwardExplain how might positive thinking help an economy expand? Demonstrate your explanation using the AD / AS graph as part of your answer.arrow_forward
- When 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_forwardSuppose that the U.S. economy is at full employment when strong economic growth in Asia increases the demand for U.S.-produced goods and services. How the U.S. price level and real GDP will change in the short run?arrow_forwardIf subsidies for research and development on new technologies lead to an increase in the average productivity of labor, what will most likely happen to real GDP per capita and long-run aggregate supply (LRAS) for a given population size? A B C D E Real GDP per capita will decrease, and LRAS will increase. Real GDP per capita will decrease, and LRAS will decrease. Real GDP per capita will increase, and LRAS will increase. Real GDP per capita will increase, and LRAS will decrease. Real GDP per capita will decrease, and LRAS will not change. Tarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
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)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Economics: Private and Public Choice (MindTap Cou...EconomicsISBN:9781305506725Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher: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
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning
Economics: Private and Public Choice (MindTap Cou...
Economics
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning