no handwritten notes! 1. Aggregate supply definitionsThe short-run aggregate supply curve shows:O What happens to the level of real GDP suppliers are willing and able to produce in an economy as the overall price level changes, during aperiod in which output prices can change but input prices are fixedO How firms respond to changes in interest ratesO What happens to output in an economy when the government spends more moneyO The relationship between the price level and aggregate expenditureWhich of the following are assumed to remain unchanged along a given short-run aggregate supply curve? Check all that apply.Input pricesThe position of the aggregate demand curveThe price levelInstitutions, such as patent laws and tax systemsPotential output (also called the natural rate of real output) refers to:O The quantity of output produced at the intersection of the aggregate demand and aggregate supply curvesO The quantity of output produced when the prices of all inputs are allowed to fully adjustO The maximum possible output of an economy with no unemploymentO The quantity of output that would be produced if every member of the labour force worked 40 hours per weekComplete the following table by matching each definition to the appropriate economic time frame.Long RunOODefinitionA period of time in which some input prices and wages are fixedA period of time in which all input prices and wages are renegotiatedShort RunOO

The supply shows the relationship between Price and the quantity supplied which is a direct and…

1. Aggregate supply definitions The short-run aggregate supply curve shows: O What happens to the level of real GDP suppliers are willing and able to produce in an economy as the overall price level changes, during a period in which output prices can change but input prices are fixed O How firms respond to changes in interest rates O What happens to output in an economy when the government spends more money O The relationship between the price level and aggregate expenditure "Which of the following are assumed to remain unchanged along given short-run aggregate supply curve? Check all that apply. Input prices

1. Aggregate supply definitions The short-run aggregate supply curve shows: O What happens to the level of real GDP suppliers are willing and able to produce in an economy as the overall price level changes, during a period in which output prices can change but input prices are fixed O How firms respond to changes in interest rates O What happens to output in an economy when the government spends more money O The relationship between the price level and aggregate expenditure "Which of the following are assumed to remain unchanged along given short-run aggregate supply curve? Check all that apply. Input prices

Principles of Economics (MindTap Course List)

8th Edition

ISBN:9781305585126

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter33: Aggregate Demand And Aggregate Supply

Section: Chapter Questions

Problem 5PA

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Match each definition to the appropriate component of aggregate demand. Definition The sum of the expenditures of business firms on new plant, equipment, and software and of households on new homes The goods and services purchased by all levels of government The total amount spent by consumers on newly produced goods and services The difference between exports and imports ⒸNet exports O Government spending Consumer Expenditure Which of the following components represents the largest piece of aggregate demand? O Consumer expenditure O Investment spending O Which of the following components represents the smallest piece of aggregate demand? O Consumer expenditure O Government spending O Investment spending ONet exports Investment Spending Government Spending Net Exports O O O O
The short-run aggregate supply curve shows: O How firms respond to changes in interest rates O What happens to the level of real GDP suppliers are willing and able to produce in an economy as the overall price level changes, during a period in which output prices can change but input prices are fixed O What happens to output in an economy when the government spends more money O The relationship between the price level and aggregate expenditure Which of the following are assumed to remain unchanged along a given short-run aggregate supply curve? Check all that apply. The technology available to firms Real GDP Institutions, such as patent laws and tax systems Input prices The natural rate of unemployment refers to: O The unemployment that arises due to purely seasonal factors, such as unemployed lifeguards in the winter O The minimum possible unemployment rate of an economy O The unemployment rate that occurs when an economy's real GDP is equal to its potential output O The unemployment…
Explain the influence of the following events on the quantity of real GDP supplied and aggregate supply in India. When fuel prices rise When the price level in India increases A. short-run aggregate supply decreases; the quantity of real GDP supplied increases O B. long-run aggregate supply decreases; short-run aggregate supply increases OC. long-run aggregate supply increases; the quantity of real GDP supplied increases OD. short-run aggregate supply increases; the quantity of real GDP supplied decreases The graph gives the long-run aggregate supply curve and the short-run aggregate supply curve for India. Suppose Canadian firms move their call handling, IT, and data functions to India. The full-employment price level does not change. If long-run aggregate supply changes, draw the new long-run aggregate supply curve and label it. If short-run aggregate supply changes, draw the new short-run aggregate supply curve and label it. Draw a point at the full-employment price level at…
8. Suppose that aggregate demand and supply for a hypothetical economy are as shown: P Amount of real Price Amount rea AS GDP level GDP supplie demanded, billions (price index) billions 100 300 450 200 250 400 AD' 300 200 300 AD 400 150 200 500 100 100 Real 100 200 300 400 GDP Use these sets of data to graph the aggregate demand and aggregate supply curves. What is the equilibrium price level and the equilibrium level of real output in this hypothetical economy? Equilibrium price level = Is the equilibrium real output also necessarily the full-capacity real output? (Yes, No ) The full-capacity level of GDP is more lil cut at $ а. Equilibrium real output = $ billion billion. b. Why will a price level of 150 not be an equilibrium price level in this economy? Why not 250? billion, (more, less ) than billion. The (shortage, surplus) of real output will drive the At a price level of 150, real GDP supplied is a maximum of $ the real GDP demanded of $ price level up. At a price level of 250,…
Aggregate demand is defined as O the relationship between the total quantity of goods and services demanded and the income level, all other determinants of spending unchanged. the relationship between the total quantity of goods and services demanded and the price level, all other determinants of spending unchanged. the demand for goods and services generated by all sectors in the economy, holding price level constant. O the relationship between the total quantity of goods and services demanded and the supply of factors of production, all other determinants of production unchanged.
Why is the aggregate demand curve downsloping? Specify how your explanation differs from the explanation for the downsloping demand curve for a single product. What role does the multiplier play in shifts of the aggregate demand curve?
If the long-run aggregate supply curve is vertical, the a change in net taxes on aggregate output in the long run is zero. Select one: O a. additional tax revenue resulting from O b. multiplier effect of O c absolute value of Od. change in government spending based on
The aggregate supply curve shows the relationship between the price level and the: O potential GDP in the economy. O total quantity of output that suppliers collectively produce. total quantity of output that buyers collectively plan to purchase. equilibrium GDP in the economy.
Which of the following policies will NOT shift the Aggregate Expenditure curve upward? Select one: O a. increasing autonomous taxes O b. decreasing autonomous taxes O c. increasing autonomous transfer payments O d. increasing government expenditures on goods and services
How do fluctuations in aggregate demand and short-run aggregate supply bring fluctuations in real GDP around potential GDP? Starting from a full-employment equilibrium, a decrease in aggregate demand and creates gap. O A. increases real GDP above potential GDP; an inflationary OB. decreases real GDP below potential GDP; an inflationary OC. increases real GDP above potential; a recessionary O D. decreases real GDP below potential GDP; a recessionary _, short-run aggregate , and the economy returns to a full-employment In the long run, the money wage rate supply equilibrium. O A. rises; increases B. falls; decreases C. rises; decreases D. falls; increases
QUESTION 8 Refer to the table, which gives aggregate demand and supply schedules for a hypothetical economy. If the price level is 250 and producers supply $450 of real output: Amount of Real Output Demanded Price Level (Index Value) Amount of Real Output Supplied $500 $200 300 300 250 450 400 200 400 500 150 300 600 150 200 O a shortage of real output of $150 will occur, O a shortage of real output of $100 will occr. O a surplus of real output of $150 will occur. O a surplus of real output of $100 will occur. O neither a shortage nor a surplus of real output will occr.
3. Why the aggregate demand curve slopes downward The following graph shows the aggregate demand (AD) curve in a hypothetical economy. At point A, the price level is 140, and the quantity of output demanded is $300 billion. Moving down along the aggregate demand curve from point A to point B, the price level falls to 120, and the quantity of output demanded rises to $500 billion. O PRICE LEVEL 170 100 150 140 130 120 110 100+ 8 90 0 100 B 200 300 400 500 OUTPUT (Billions of dollars) AD 600 700 800