Assume the Federal Reserve triples the growth rate of the quantity of money in circulation. In thelong run, this increase in money growth will affect which of the following? Check all that apply.Suppose when unemployment is at its natural rate the economy produces a level of real GDP equalto $50 billion.Using the purple points (diamond symbol) plot the economy's long-run aggregate supply (LRAS)curve on the graph.132128124120116112108The inflation rateThe quantity of physical capitalThe size of the labor forceThe price level1041000 102030 40 50 60 70OUTPUT (Billions of dollars)80 90 100LRAS(?)Suppose now the government passes a law that reduces unemployment benefits in a way thatcauses unemployed workers to seek out new jobs more quickly. This change in policy will cause thenatural rate of unemployment to, which will:Shift the long-run aggregate supply curve to the leftNot impact the long-run aggregate supply curveShift the long-run aggregate supply curve to the rightComplete the following table by determining how each event impacts the position of the long-runaggregate supply (LRAS) curve.An investment tax credit increases the rate at which firmsacquire machinery and equipment.Many workers leave to pursue more lucrative careers inforeign economies.For environmental and safety reasons, the governmentrequires that the country's nuclear power plants bepermanently shut down.Direction of LRAS Curve Shift

When the supply of money in an economy increases, the demand for products and services rises. This…

Assume the Federal Reserve triples the growth rate of the quantity of money in circulation. In the long run, this increase in money growth will affect which of the following? Check all that apply. Suppose when unemployment is at its natural rate the economy produces a level of real GDP equal to $50 billion. Using the purple points (diamond symbol) plot the economy's long-run aggregate supply (LRAS) curve on the graph. PRICE LEVEL 132 126 124 120 8 116 112 108 The inflation rate The quantity of physical capital The size of the labor force The price level 104 100 。 10 20 30 40 50 70 OUTPUT (Billions of dollars) 80 90 100 LRAS

Assume the Federal Reserve triples the growth rate of the quantity of money in circulation. In the long run, this increase in money growth will affect which of the following? Check all that apply. Suppose when unemployment is at its natural rate the economy produces a level of real GDP equal to $50 billion. Using the purple points (diamond symbol) plot the economy's long-run aggregate supply (LRAS) curve on the graph. PRICE LEVEL 132 126 124 120 8 116 112 108 The inflation rate The quantity of physical capital The size of the labor force The price level 104 100 。 10 20 30 40 50 70 OUTPUT (Billions of dollars) 80 90 100 LRAS

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter8: Macroeconomic Equilibrium: Aggregate Demand And Supply

Section: Chapter Questions

Problem 19E

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Assume the Federal Reserve triples the growth rate of the quantity of money in circulation. In the long run, this increase in money growth will affect which of the following? Check all that apply. -The inflation rate -The size of the labor force -The quantity of physical capital -The price level Suppose when unemployment is at its natural rate the economy produces a level of real GDP equal to $70 billion. Using the purple points (diamond symbol) plot the economy's long-run aggregate supply (LRAS) curve on the graph. Suppose now the government passes a law that reduces unemployment benefits in a way that causes unemployed workers to seek out new jobs more quickly. This change in policy will cause the natural rate of unemployment to (increase/fall/decrease) , which will: - Shift the long-run aggregate supply curve to the right - Not impact the long-run aggregate supply curve - Shift the long-run aggregate supply curve to the left…
Suppose an economist believes that the price level in the economy is directly related to the money supply, or the amount of money circulating in the economy. The economist proposes the following relationship: P=A×MP=A×M • P=Price LevelP=Price Level • M=Money SupplyM=Money Supply • A=A composite of other factors, including real GDP, that change very slowly over time.A=A composite of other factors, including real GDP, that change very slowly over time. How might an economist gather empirical data to test the proposed relationship between money and the price level?
In the year 2023, aggregate demand and aggregate supply in the fictional country of Gurder are represented by the curves AD2023 and AS on the following graph. Suppose the natural level of output in this economy is $10 trillion. On the following graph, use the green line (triangle symbol) to plot the long-run aggregate supply (LRAS) curve for this economy. PRICE LEVEL 108 107 106 105 104 103 102 101 100 0 2 AD 2023 B I A 4 6 8 10 OUTPUT (Trillions of dollars) 12 AS ADB 14 AD А 16 A LRAS Outcome C (?)
On the following graph, use the purple line (diamond symbol) to plot this economy's long-run aggregate supply (LRAS) curve. Then use the orange line segments (square symbol) to plot the economy's short-run aggregate supply (AS) curve at each of the following price levels: 100, 105, 110, 115, and 120 125 120 115 110 PRICE LEVEL 88 S M 90 AS BO 75 a 10 20 30 42 50 60 70 OUTPUT (Billions of dollars) 60 100 ¢ AS LRAS ? The short-run quantity of output supplied by firms will fall short of the natural level of output when the actual price level, level that people expected. the price
ECN201_N40_SP24: Workshee X bads/Worksheet%205-%20AS%20and%20AD%20(2).pdf P Worksheet 5: Aggregate Supply and Aggregate Demand Name: Complete the questions below. Be sure to show your work. Upload this worksheet to Moodle. Consider the following Aggregate Supply and Aggregate Demand curves. 10 8 6 Microsoft word 4 2 1 / 1 | - 100% + 20 40 1. What is the ACTUAL level of GDP? AS/AD 2. What is the equilibrium price level? m LRAS 60 80 SRAS AD 100 120 GDP tvilli A AL
6. Assume the money-demand curve is MD=105 – 18 r + Y, the price level depends on r according to the equation P = 95 – 16 r, and the money supply is MS = 155. Find a relationship between the price level P and output Y and show that the relation that you have found is an aggregate demand function. Y= - P
Consider a macro-economy that was initially at equilibrium. Using an aggregate demand and aggregate supply diagram model of the economy, graphically illustrate and discuss the short-run and long-run effectsof the following events upon the economy:(a) The imposition of a carbon tax upon local big polluting companies;(b) An appreciation in the foreign exchange rate value of the economy’s currency;(c) A major trading partner’s economy fall into recession;(d) The country’s main exports fall in price while the goods the country imports from abroad rise in price
The U.S. economy is initially in short-run macro-equilibrium. Assume that, in the face of Covid-19, firms’ costs increase as they must comply with safety regulations to keep their employees safe at work. As a result, we observe the following in our economy: Question 31 options: a) Both the price level and real GDP decrease b) The price level increases and real GDP falls c) The price level falls and real GDP increases d) Both the price level and real GDP increase.
The following graph shows an increase in short-run aggregate supply (AS) in a hypothetical economy where the currency is the dollar. Specifically, the short-run aggregate supply curve shifts to the right from AS, to AS₂, causing the quantity of output supplied at a price level of 100 to rise from $200 billion to $250 billion. PRICE LEVEL 200 175 150 125 100 75 50 25 0 0 50 AS, AS 100 150 200 250 300 350 400 QUANTITY OF OUTPUT The following table lists several determinants of short-run aggregate supply. Regulations on the firm Human capital Inflation expectations Complete the table by selecting the changes in each scenario necessary to increase short-run aggregate supply. Change Necessary to Increase AS
Suppose the economy is in a long-run equilibrium, as shown in the following graph. Now suppose that firms become pessimistic about future business conditions and decide to cut back on investment spending, resulting in a fall in aggregate demand. Use your diagram to show what happens to output and the price level in the short run, Price Level LRAS Aggregate Supply Quantity of Output As a result of this change, the unemployment rate Aggregate Demand On the graph, illustrate the change that will occur in the long run. 1 Aggregate Supply LRAS ? Use the sticky-wage theory of aggregate supply to think about what will happen to output and the price level in the long run (assuming there is no change in policy).
The following graph shows the aggregate demand curve in a hypothetical economy. Assume that the economy's money supply remains fixed. PRICE LEVEL (CPI) 160 150 140 130 120 110 100 90 80 0 Aggregate Demand 100 200 300 400 500 REAL GDP (Billions of dollars) 600 700 800 ? Which of the following are reasons the aggregate demand curve is downward sloping? Check all that apply. A higher price level makes domestically produced goods more expensive than foreign goods. A lower price level leads to a lower interest rate. A lower price level increases the consumption of complementary goods. As the aggregate price level rises, the purchasing power of households' saving balances will demanded to This phenomenon is known as the effect. , causing the quantity of output
The following graph shows a decrease in short-run aggregate supply (AS) in a hypothetical economy where the currency is the dollar. Specifically, the short-run aggregate supply curve shifts to the left from AS1 to AS2, causing the quantity of output supplied at a price level of 100 to fall from $200 billion to $150 billion. 200 AS, 2. 175 AS 150 125 100 75 50 25 50 100 150 200 250 300 350 400 QUANTITY OF OUTPUT The following table lists several determinants of short-run aggregate supply. Fill in the table by indicating the changes in the determinants necessary to decrease short-run aggregate supply. Change Needed to Decrease AS Inflation expectations Human capital Technology PRICE LEVEL