A temporary "supply shock" will Select one: a. cause AD to shift down (or decrease). b. cause AD to flatten out (smaller slope). c. cause LRAS to rotate and slope upwards at a 45-degree angle. d. cause SRAS to shift either right (if it is a good shock) or left (if it is a bad shock).
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A temporary "supply shock" will
cause AD to shift down (or decrease).
cause AD to flatten out (smaller slope).
cause LRAS to rotate and slope upwards at a 45-degree angle.
cause SRAS to shift either right (if it is a good shock) or left (if it is a bad shock).
Step by step
Solved in 3 steps
- (1) Suppose the economy is in long-run equilibrium. If there is a sharp increase in the expected price level, what do we expect to happen? Select one: (A) In the short run, the SRAS curve will shift left, real GDP and price will fall. (B) In the short run, SRAS will shift right, real GDP will rise and prices will fall. (C) In the short run, AD will shift left, real GDP and prices will fall. (D) In the short run, LRAS and SRAS will shift left, causing real GDP to fall.Refer to the graph to the right. The shift from AS, to AS₂ shown in the diagram is referred to as a(n) OA. decrease in unit costs. B. increase in unit costs. OC. negative aggregate supply shock. OD. positive aggregate supply shock. Price Level P₁- B A AS₂ AS₁Explain how Break even point can be altered by varying various parameters with diagrams.
- Determine the effect on aggregate demand/ Short Run Agrregate supply of each of the followingevents. Explain whether it represents a movement along the aggregate demand/ Short run Aggregatesupply curve (up or down) or a shift of the curve (leftward or rightward).a) News of a worse-than-expected job market next yearb) A rise in the consumer price index (CPI) leads producers to increase output.c) A rise in legally mandated retirement benefits paid to workers leads producers to reduceoutput.d) As a result of an increase in the value of the dollar in relation to other currencies, Americanproducers now pay less in dollar terms for foreign steel, a major commodity used in production.e) An increase in the quantity of money by the Federal Reserve increases the quantity of moneythat people wish to lend, lowering interest rates.f) Greater union activity leads to higher nominal wages.g) A fall in the aggregate price level increases the purchasing power of households’ and firms’money holdings. As…Aggregate Supply Aggregate Demand Price Level rGDP Price level rGDP 115 620 100 660 640 120 110 650 125 660 640 120 130 680 130 630 140 700 140 620 150 712 150 610 160 722 160 600 170 730 170 590 You may find the “Centauri 2112" Excel file useful in your efforts. The AI that runs your actuarial department has calculated that, at any price level, Centauri's aggregate demand has the equation AD = 0.75(Y – T) + G, where Y is real GDP, T is total taxes, I is investment and G is government spending. Everything is measured in billions of 2099 Cents (denoted C). The government reports that taxes are T = 60 and government expenditures are G = 205. a) By how much will a 10-Cent decrease in taxes T increase Aggregate Demand? b) By how much will a 10-Cent increase in government spending G increase Aggregate Demand?. c) Which policy is a more effective way to change Aggregate Demand? d) Determine a policy that will return the Centauri economy to its long-run equilibrium. That is, figure out a…17. Aggregate operations planners seek to match supply and demand at the minimum overall cost and: a) keeping inventories at a minimum. b) hiring when necessary. c) keeping inventories at a maximum. d) by staying within company policy.
- Consider the following actual and forecast demandlevels for Big Mac hamburgers at a local McDonald’s restaurant:DAY ACTUAL DEMAND FORECAST DEMANDMonday 88 88Tuesday 72 88Wednesday 68 84Thursday 48 80FridayThe forecast for Monday was derived by observing Monday’sdemand level and setting Monday’s forecast level equal to this demand level. Subsequent forecasts were derived by using expo-nential smoothing with a smoothing constant of 0.25. Using this exponential smoothing method, what is the forecast for Big Macdemand for Friday?Consider the orginal IS-curve. Suppose demand in the U.S. for imports from Japan increases. This leads to what? Select all the correct statements. (a) Lower short - run output in the U.S.. (b) A downward shift in the IS - curve in Japan. (c) A positive aggregate demand shock in Japan. (d) An upward shift in the IS - curve in the U.S.. (e) A movement along the IS-curve in Japan.8. Assume that there is an exogenous decline in the price of imported oil. Using the graphical analysis in this chapter, explain how such a shock would affect output and the price level. Explain the role inflationary expectations play in this adjustment.
- 7. We ran a Vector-autoregresive model with two variables: with dtrade (change in trade balance), doilpr (change in oilpr) with one-lag and the result is as follows: dtrade 1st Lag of Trade Balance 1st Lag of Oil Price doilpr 1st Lag of Trade Balance 1st Lag of Oil Price Coef 0.48 275 0.04 1291 0.02 2939 0.35 7591 Std. Err 0.04 2789 0.02 1304 0.09 2198 0.04 5904 Z- statistic 11. 28 1.9 4 0.2 5 7.7 9 P>| zl 0 0.0 53 0.8 04 0 a) What can you infer from the result? b) Can you say anything about the long-run equilibrium value for change in trade- balance given the result?A computer virus infects critical manufacturing equipment around the country, resulting in partial or complete shutdowns in manufacturing capabilities. Illustrate what occurs to the aggregate supply curve by shifting it in the appropriate direction. Provide your answer below: Price Level Reflect in ePortfolio Aggregate Supply Aggregate Demand Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.Che Assume that an economy starts from long-run equilibrium, and then there is an increase a sharp increase in oil prices, ceteris paribus. Where on the following graph would the economy be after this initial shock but before any self- adjustment? #1 Multiple Choice O O O LRAS SRAS1 SRAS (Y) (YP:13) (Yo: #2) AD ADO