Homework Answers
Answer: increase the price level and leave the level of output unchanged in the longrun .
In the long run, the economy is always in the full employment equilibrium. In the short run, when aggregate demand increases, it leads to an increase in price as well aggregate output. But in the long run, when aggregate demand increases, only price increases and the level of output remains in the full employment level. This is because full employment level is the maximum or potential level of an economy. Any further attempt to increase aggregate demand raises just the price level and not the output level.
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Question 4 1 pts If the economy is in equilibrium at full employment, an increase in...
Question 1 An increase in the price level will ________ the real value of wealth and,...
Question 1 An increase in the price level will ________ the real value of wealth and, as a result, there will be ________ the aggregate demand curve. have no effect on; no change in increase; a rightward shift of reduce; an upward movement along reduce; a leftward shift of increase; an upward movement along 2. A severe drought hits a country and reduces farm output by 50 percent. This will impact aggregate demand. short-run aggregate supply and aggregate demand. short-run...
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The graph below depicts an economy where an increase in aggregate demand has caused inflation. The economy's current level of real GDP (Y) is above its long-run equilibrium. This is illustrated by the long-run aggregate supply curve (LRAS) and a price level 2) above the equilibrium value of Pe Fiscal Policy Price Level Real GDP Which of the following is an example of an automatic stabilizer that would help this economy move toward full employment again A reduced need for...
if the economy is in long run equilibrium at full employment, the level of overall economic...
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Assume that the following graph depicts aggregate supply and demand conditions in an economy. Full employment...
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This Question: 3 pts 26 of 30 (25 complete) Assuming the economy is initially at full...
This Question: 3 pts 26 of 30 (25 complete) Assuming the economy is initially at full employment, a decrease in aggregate demand in the economy will have what effect on macroeconomic equilibrium in the long run? OA. The price level will rise, and the level of GDP will be unaffected. OB. The price level will rise, and the level of GDP will fall OC. The price level will fall, and the level of GDP will fall, OD. The price level...
(6) Imagine that the economy is in a recession. Which one of the following tactics is...
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1. The economy of Maxistan is currently in a recession. Show the current short-run equilibrium in a correctly lab...
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I. The economy of Zarland is operating below the full-employment level of output with a balanced budget. (a) Draw a correctly labeled graph of short-run aggregate supply, long-run aggregate supply, a...
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Describe three types of short-run macroeconomic equilibrium.
Describe three types of short-run macroeconomic equilibrium. A macroeconomic equilibrium in which real GDP is less than potential GDP is _______ equilibrium. And one in which real GDP equals potential GDP is _______ equlibrium. A. a below full-employment, a full-employment B. a full-employment, a below full-employment C. a full-employment, an inflationary D. a below full-employment, a recessionary The graph shows an economy's long-run aggregate supply curve. The economy is at an above full-employment equilibrium. Draw an aggregate demand curve and a short-run aggregate supply curve. Label them. In the graph,...
Concept Check Question 3.1 Concept Check Question 3.1 If the economy adjusts through the automatic mechanism,...
Concept Check Question 3.1
Concept Check Question 3.1 If the economy adjusts through the automatic mechanism, then a decline in aggregate demand causes O A. an expansion in the short run and an increase in the price level in the long run. O B . an expansion in the short run and a decline in the price level in the long run. O C. a recession in the short run and an increase in the price level in the long...
The graph below depicts an economy where an increase in aggregate demand has caused inflation. The economy's current level of real GDP (Y) is above its long-run equilibrium. This is illustrated by the long-run aggregate supply curve (LRAS) and a price level 2) above the equilibrium value of Pe Fiscal Policy Price Level Real GDP Which of the following is an example of an automatic stabilizer that would help this economy move toward full employment again A reduced need for...
Assume that the following graph depicts aggregate supply and demand conditions in an economy. Full employment occurs when $5 trillion of real output is produced. The economy is currently in equilibrium at point A. 260 AS, 240 AS2 220 200 Price Level (average price) 180 160 AD2 140 120 ADA 100 0 2 3 7 8 Real Output (in trillions per year) Instructions: For parts (a) and (b) enter your answer rounded to the nearest whole number (a) What is...
This Question: 3 pts 26 of 30 (25 complete) Assuming the economy is initially at full employment, a decrease in aggregate demand in the economy will have what effect on macroeconomic equilibrium in the long run? OA. The price level will rise, and the level of GDP will be unaffected. OB. The price level will rise, and the level of GDP will fall OC. The price level will fall, and the level of GDP will fall, OD. The price level...
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Concept Check Question 3.1
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