Assume that the United States economy is currently in a recession in a short-run equilibrium. Draw a correctly labeled graph of aggregate demand and aggregate supply in the recession and show each of the following. The long-run equilibrium output, labeled Yf
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Assume that the United States economy is currently in a recession in a short-run equilibrium.
Draw a correctly labeled graph of aggregate
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- Assume that the United States economy is currently in a recession in a short-run equilibrium. Draw a correctly labeled graph of aggregate demand and aggregate supply in the recession and show each of the following. The current equilibrium output and price levels, labeled Ye and PLe, respectively.Suppose the economy is in a long-run equilibrium a)Draw a diagram to illustrate the state of the economy . Be sure to show aggregate demand, short-run aggregate supply, and long-run aggregate supply. b) The federal government increases spending on national defense. c) A technological improvement raises productivityIn the long-run, aggregate supply is a horizontal line at the long-run price level people can afford. True False One reason for why the aggregate demand curve slopes down is the wealth effect, which means that a higher price level leads to lower real wealth and, thereby, reduces the level of consumption. True False
- Which of the figures above illustrates an economy in long-run equilibrium? A) Figure A B) Figure B C) Figure CDraw Aggregate Demand, Short Run Aggregate Supply, and Long Run Aggregate Supply as if an economy is in both short run and long run equilibrium.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.
- The following events have occurred in the history of the United States: A deep recession hits the world economy. The world oil price rises sharply. S. businesses expect future profits to fall. Explain the separate effects of each event on U.S. real GDP and the price level, starting from a position of long-run equilibrium.The following graph plots aggregate demand (AD2027AD2027) and aggregate supply (AS) for the imaginary country of Cotopaxi in the year 2027. Suppose the natural level of output in this economy is $6 trillion. On the following graph, use the green line (triangle symbol) to plot the long-run aggregate supply (LRAS) curve for this economy. Economists forecast that if the government takes no action and the economy continues to grow at the current rate, aggregate demand in 2028 will be given by the curve labeled ADAADA, resulting in the outcome given by point A. If, however, the government pursues an expansionary policy, aggregate demand in 2028 will be given by the curve labeled ADBADB, resulting in the outcome given by point B. The following table presents projections for the unemployment rates that would occur at point A and point B. Consider the potential rate of inflation between 2027 and 2028, depending on whether the economy moves from the initial price level of 102 to the…If aggregate supply is vertical, then which of the following statements must be true? Aggregate demand does not affect the quantity of output. Inflation creates greater social benefits. Inflation will accompany any rise in output. Aggregate demand does not cause inflationary changes in price level.
- An economy is described by the following: C=20+0.9Y I=120-200r Md=250+0.2Y-400r Ms/P=1250 Y=70 W=17.5 Lf=144 a) Find agregate supply and agregate demand. b) Find the equilibrium level of Y and P. c) Graphically represent this economy. d) Find the long-run Y of this economy. e) What is the level of government expenses G, the government needs to impose in order to lead the economy to the full employment? (Show the long-run graphically).The graph shows the economy in long-run equilibrium. Then the world economy expands and the demand for Canadian-produced goods increases. Draw a curve that shows: 1) the effect of increased demand for Canadian-produced goods. Label it 1. 2) the effect of a rising money wage rate that returns the economy to full employment. Label it 2. Draw a point at the new long-run equilibrium. An economy is in a long-run equilibrium. An increase in aggregate demand creates the money wage rate decreases gap. A rise in and returns the economy to a full-employment equilibrium. O A. a positive; short-run aggregate supply B. a recessionary; short-run aggregate supply C. an inflationary; short-run aggregate supply and long-run aggregate supply O D. an inflationary; the quantity of real GDP demanded 140- 130- 120- 110+ 100+ 90- Price level (GDP deflator, 2007=100) 80+ 1.6 LAS 1.7 1.8 1.9 Real GDP (trillions of 2007 dollars) SAS AD 2.0 Q OThe graph to the right shows an economy's aggregate demand curve. Show the determination of the economy's long-run macroeconomic equilibrium by (i) using the Line tool to draw and label the long-run aggregate supply curve to show an equilibrium and (ii) using the Point tool to identify the equilibrium point. Label this point E. Price level Real GDP AD E
