A) Explain which market state is represented in the graph above? Answer:
B) What is the difference between autonomous consumption and autonomous spending? Answer:
Homework Answers
A) The above graph shows the state at which the market is at a short run equilibrium.
A short run equilibrium is said to occur when the price and quantity are at their equilibrium levels at the point where the SRAS curve intersects the AD curve.
When this occurs, Yo 
Y1, which shows that there is a positive inflationary gap.
B) Autonomous consumption refers to the consumption of goods and services when the income level of a person is nill or zero.
This shows that a person is indifferent to the consumption of goods and services even when his income is zero.
On the other hand, an autonomous spending refers to economic level of spending which occurs irrespective of the changes in the real economic income.
It is type of spending within an economy which not does not depend on the income levels or the size of the economy.
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A) Explain which market state is represented in the graph above?
Answer:
B) What is the...
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The graphs illustrate an initial equilibrium for the economy. Suppose that the stock market broadly decreases. Use the graphs to show the new positions of aggregate demand (AD), short-run aggregate supply (SRAS), and long-run aggregate supply (LRAS) in both the short run and the long run, as well as the short-run and long-run equilibriums resulting from this change. Then, indicate what happens to the price level and GDP in the short run and in the long run. Short-run graph Long-run...
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