In the following figure, an economy is currently in short-run equilibrium at point a. What is likely to happen in the long run? LRAS SRAS Aggregate Output (0) SRAS will shift to the left and the aggregate price level will decrease. SRAS will shift to the right and the aggregate price level will decrease. SRAS will shift to the right and the aggregate price level will increase. SRAS will shift to the left and the aggregate price level will increase. Aggregate Price Level (P)

In the following figure, an economy is currently in short-run equilibrium at point a. What is likely to happen in the long run? LRAS SRAS Aggregate Output (0) SRAS will shift to the left and the aggregate price level will decrease. SRAS will shift to the right and the aggregate price level will decrease. SRAS will shift to the right and the aggregate price level will increase. SRAS will shift to the left and the aggregate price level will increase. Aggregate Price Level (P)

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter14: Aggregate Demand And Supply

Section14.A: The Self Correcting Aggregate Demand And Supply Model

Problem 1SQP

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The U.S. economy is in both short-run and long-run equilibrium, as shown in the graph below. Assume the federal government decides to decrease personal income taxes. a. Show the effect on the short-run equilibrium as a result of the decrease in taxes. Using the graph, draw either the new AD curve or new AS curve resulting from this change. Instructions: Use the tool provided "New Curve" to plot the appropriate line. After placing the curve, click on "Select" and choose whether to label the curve "AD1" or "AS1" from the dropdown menu.
In the following table, determine how each event affects the position of the long-run aggregate supply (LRAS) curve. Direction of LRAS Curve Shift The government allows more immigration of working-age adults who find work. No shift v This economy's primary source of foreign oil decides to cease exports for political reasons. Right An investment tax credit increases the rate at which firms acquire machinery and Left equipment. Grade It Now Save & Continue Continue without saving rti...docx ere to search hp %23
The graphs illustrate an initial equilibrium for some economy. Suppose that the economy experiences a rise in aggregate demand. Use the graphs to illustrate the new positions of AD, SRAS, and LRAS as well as the new short-run and long-run equilibria resulting from this change. Short-Run Graph Long-Run Graph LRAS LRAS SRAS SRAS Equilibrium point Equilibrium point AD AD Real GDP Real GDP Aggregate price level Aggregate price level
In the above figure; when the economy is in a longr run equabrium, the price level will be 90 . 110. 120, 100
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.
The Canadian government increases its expenditure on goods and services in a time of war or increased international tension, Starting from a position of long-run equilibrium, what effect does this event have on Canada's economy in the short run? Real GDP increases and the price level rises. Real GDP decreases and the price level falls. Real GDP increases and the price level falls. Real GDP decreases and the price level risek There is no change in either real GDP or the price level. O000
Explain what will happen as a result of the following events. In each case, draw an aggregatedemand and short-run aggregate supply diagram showing the initial equilibrium output level (Y0) andprice level (P0). Show any changes, indicate the final equilibrium output level and price level andexplain briefly.a. The economy is in a recession. An increase in government purchases occurs. The Fedtries to maintain the interest rate. b. The economy is operating near full capacity. Now environmental pollution standardsare tightened substantially.
A central bank forecasts a rise in raw material costs. The government plans to increase spending on health and education. The initial equilibrium point is shown by X on the aggregate demand, AD, and aggregate supply, AS, diagram. What would be the new equilibrium point in the short run if the forecasts prove to be accurate and the government plans are implemented? AS, AS2 general price level AS B A AD, AD AD, real output C.
Which of the following causes the short-run aggregate supply curve to shift to the right? OA. an increase in the expected price of an important natural resource OB. a positive technological change OC. a higher expected future price level O D. a decrease in the capital stock
Consider the graph below. Suppose that the economy is at point A Price Level LRAS SRAS A AD + Y (GDP) Currently, this economy Select in the long run, what will happen in this economy? The ISelect) curvets) will ISelect) because ISelect The price level will Select) GDP will (Select)
Figure 15.1 Price level B LRAS AD₂ SRAS1 AD₁ SRAS2 Real GDP (billions of dollars) Refer to Figure 15.1. Suppose the economy is at point A. If consumer spending increases in the economy, where will the eventual long-run equilibrium be? A B
Suppose firms become very optimistic about future business conditions and invest heavily in new capital equipment. Show the short-run effect of this optimism on the aggregate-demand curve. Price Level LRAS Quantity of Output AS₂2 AS, The price level has risen. Wages are not sticky. AD₂ AD₁ Prices are sticky. People have misperceptions about the price level. Aggregate Demand Aggregate Supply LRAS Which of the following reasons could explain why the aggregate quantity of output supplied changes? Check all that apply. ?