1. Aggregate supply definitionsThe short-run aggregate supply curve shows:What happens to output in an economy as the actual price level changes, holding all other determinants ofreal GDP constantWhat happens to output in an economy when the government spends more moneyHow firms respond to changes in interest ratesThe relationship between the price level and aggregate expenditureThe term potential output refers to:The quantity of output produced when the price level is the same as firms and workers expected when theyagreed on resource prices and wagesThe quantity of output that would be produced if every member of the labor force worked 40 hours per weekThe quantity of output produced at the intersection of the AD and AS curvesThe maximum possible output for an economyIn macroeconomics, the term short run refers to:A period of time long enough for all resource prices and wages to be renegotiatedA period of 10 yearsA period of time in which some resource prices and wages are fixedA period of 1 year

Aggregate supply refers to the total quantity of goods or services that a nation produce in a period…

1. Aggregate supply definitions The short-run aggregate supply curve shows: What happens to output in an economy as the actual price level changes, holding all other determinants of real GDP constant What happens to output in an economy when the government spends more money How firms respond to changes in interest rates The relationship between the price level and aggregate expenditure

1. Aggregate supply definitions The short-run aggregate supply curve shows: What happens to output in an economy as the actual price level changes, holding all other determinants of real GDP constant What happens to output in an economy when the government spends more money How firms respond to changes in interest rates The relationship between the price level and aggregate expenditure

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
Assume an economy operates in the intermediaterange of its aggregate supply curve. State thedirection of shift for the aggregate demandor aggregate supply curve for each of thefollowing changes in conditions. What is theeffect on the price level? On real GDP? Onemployment?a. The price of crude oil rises significantly.b. Spending on national defense doubles.c. The costs of imported goods increase.d. An improvement in technology raises laborproductivity.
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…
The economy has shifted and the quantity of the real GDP supplied has increased. What has potentially happened to aggregate price levels? Potentially the price levels have increased to a higher aggregate price level and if the wages are sticky, businesses have hired more employees as labor has become cheaper. O Potentially the price levels have decreased to a lower aggregate price level and if the wages are sticky, businesses have hired more employees as labor has become cheaper. Potentially the price levels have increased to a higher aggregate price level and if the wages are sticky, businesses have fired some employees as labor has become too expensive.
"The following chart indicates the aggregate demand (AD) and short-run aggregate supply (SRAS) schedules of decision- makers for the current period. Both buyers and sellers previ- ously anticipated that the price level during the current period would be P 105 a. Indicate the quantity of GDP that will be produced during this period. b. Will it be a long-run equilibrium level of GDP? Why or why not? c. What will the relationship between the actual and natural rates of unemployment be during the period? Explain 20 your answer.
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 The relationship between the price level and aggregate expenditure O What happens to output in an economy when the government spends more money Which of the following are assumed to remain unchanged along a given short-run aggregate supply curve? Check all that apply. O Input prices The price level O Institutions, such as patent laws and tax systems Real GDP Potential output (also called the natural rate of real output) refers to: O The quantity of output that would be produced if every member of the labour force worked 40 hours per week O The quantity of output produced when the prices of all inputs are allowed to fully adjust O The quantity of output produced at the intersection of the…
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
R The model of aggregate demand/aggregate supply... O Identifies the equilibrium GDP and price level as well as the gap between the equilibrium GDP and the potential GDP Identifies the potential GDP and price level as well as the gap between the price level and the inflation. O Identifies the equilibrium GDP the economy will reach in the long A run O Identifies the equilibrium quantity and price for consumer goods 10 % 5 T 6 O Y Com liji fa 887 & 7 7 U 8 4 f10 num lk. 8 ( 5 9 開

The following graph shows several aggregate demand and aggregate supply curves for an economy whose potential output is $4 trillion. The curves are labeled a, b, c, and d. Three points on the graph are also indicated by grey stars and labeled X, Y, and Z. PRICE LEVEL AD 160 150 140 130 120 LRAS 110 B 100 90 80 0 Description с 1 d X 2 3 6 4 5 REAL GDP (Trillions of dollars) SRAS if the expected price level is 120 Identify which curve on the previous graph corresponds to each of the following descriptions. If the curve described is not shown on the graph, choose Not Shown. In the descriptions, AD represents aggregate demand; SRAS represents short-run aggregate supply; LRAS represents long-run aggregate supply. SRAS if the expected price level is 140 SRAS if the expected price level is 110 a O O O O O b 7 O O O с b O O 8 d O O O O O Not Shown ? O O O O O Suppose the economy is currently in short-run equilibrium at point Z. In this case, the economy is producing at an output level…
Real GDP Real GDPDemanded, Price Level Supplied,Billions (Price Index) Billions$100 300 $450200 250 400300 200 300400 150 200500 100 100 Use these sets of data to graph the aggregate demandand aggregate supply curves. What is the equilibriumprice level and the equilibrium level of real output inthis hypothetical economy? Is the equilibrium real output also necessarily the full-employment real output?Explain.b. Why will a price level of 150 not be an equilibriumprice level in this economy? Why not 250?c. Suppose that buyers desire to purchase $200 billion ofextra real output at each price level. Sketch in the newaggregate demand curve as AD1. What factors mightcause this change in aggregate demand? What is thenew equilibrium price level and level of real output?
Refer to Figure 9.1. When the price level rises and causes lower consumption expenditures, it is illustrated as: `AD2 AD1 ADo Aggregate output, Y O a move from Point B to Point A, but not a shift of the aggregate demand curve. O an aggregate demand curve shift from AD1 to ADO. an aggregate demand curve shift from AD1 to AD2. O a move from Point A to Point B, but not a shift of the aggregate demand curve. Price level, P
What effects would each of the following have on aggregate demandor aggregate supply, other things equal? In each case explain the expectedeffects on the equilibrium price level and the level of real output, assumingthat the price level is flexible both upward and downward. · A reduction in interest rates at each price level.· A major increase in spending for health care by the Federalgovernment.· A 10 percent across-the-board reduction in personal income taxrates.· A sizable increase in labor productivity (with no change innominal wages).· An increase in exports that exceeds an increase in imports (notdue to tariffs).