Draw and fully label an AD-AS model. Describe the short-run aggregate supply (SRAS) curve and the long-run aggregate supply (LRAS) curve in words. Why is one of these curves horizontal and the other vertical?
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Draw and fully label an AD-AS model. Describe the short-run
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- How is recession illustrated in an AD/AS model?What is the difference between short-run aggregate supply and long-run aggregate supply In the AD-AS model? The short-run aggregate supply curve is sloping upwards while the long-run aggregate supply curve is sloping A upwards. The short-run aggregate supply curve is sloping downwards while the long-run aggregate supply curve is B horizontal. The short-run aggregate supply curve is sloping upwards while the long-run aggregate supply curve is vertical. The short-run aggregate supply curve is sloping downwards while the long-run aggregate supply curve is horizontal.Using the AD-AS model, if consumers and business become more optimistic about the future direction of the economy and increase spending, then: a-long-run aggregate supply will decrease. b-aggregate demand will decrease. c-aggregate demand will increase. d-long-run aggregate supply will increase.
- Review the problem shown in the Work It Out titled "Interpreting the AD/AS Model." Like the information provided in that feature, Table 24.2 shows information on aggregate supply, aggregate demand, and the price level for the imaginary country of Xurbia. Price Level AD AS 110 700 600 120 690 640 130 680 680 140 670 720 150 660 740 160 650 760 170 640 770 Table24.2 Price Level: AD/AS Plot the AD/AS diagram from the data shown. Identify the equilibrium. Imagine that, as a result of a government tax cut, aggregate demand becomes higher by 50 at every price level. Identify the new equilibrium. How will the new equilibrium alter output? How will it alter the price level? What do you think will happen to employment?Assume there is a particular short-run aggregate supply curve for an economy and the curve is relevant for several years. Use the AD-AS analysis to show graphically why higher rates of inflflation over this period would be associated with lower rates of unemployment, and vice versa. What is this inverse relationship called?The imaginary country of Harris Island has the aggregate supply and aggregate demand curves as Table 24.3 shows. a. Identify the (i) equilibrium basing from the AD/AS diagram attached. b. Would you expect unemployment in this economy to be relatively high or low? c. Would you expect concern about inflation in this economy to be relatively high or low? d. Imagine that consumers begin to lose confidence about the state of the economy, and so AD becomes lower by 275 at every price level. Identify the new aggregate equilibrium. e. How will the shift in AD affect the original output, price level, and employment?
- Explain with the aid of a diagram An increase in the price of oil is an example of a negative supply shock. Use the AD-AS model graph to explain the effect of a negative supply shock on the price levels and output levels in the economy.Based on Aggregate Demand and Aggregate Supply Model, what is the effect on AD of each of the following events (will AD increase and shift to the right or decrease and shift to the left): A decrease in individual taxes. A decrease in government spending. An increase in interest rates.Using the “dynamic aggregate demand” and “dynamic aggregate supply” (DAD/DAS) model: (a) draw a graph and discuss the effect of a reduction in aggregate demand.
- Assume initially an economy is at its long run equilibrium. Then, price of oil in theworld increases. What will happen to real GDP and aggregate price level in the short runequilibrium following the increase in price of oil? Use the Aggregate Demand – AggregateSupply model to answer the question.Please assist with the following An increase in the price of oil is an example of a negative supply shock. Use the AD-AS model graph to explain the effect of a negative supply shock on the price levels and output levels in the economy.
