Q: Why unemployment results when Aggregate Demand is lesser than Aggregate Supply in the economy?
A: Aggregate demand refers to the total demand for the finished goods and services in an economy—the…
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A: Aggregate demand refers to the overall demand for goods and services in an economy. Aggregate supply…
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A: Hello. Since you have posted multiple questions and not specified which question needs to be solved,…
Q: Discuss one reason for the downward sloping aggregate demand curve.
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A: Aggregate demand (AD): - It is the total demand of goods and services in an economy at a particular…
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A: Aggregate supply would increase,equilibrium price level and real output would increase.
Q: Explain whether each of the following events shifts the short-run aggregate supply curve, the…
A: Note: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question…
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Q: help
A: The demand comes from all the economic agents such as the households, firms as well as the…
Q: Determine whether each of the following would cause a shift of the aggregate demand curve, a shift…
A: Aggregate demand curve shows quantity demanded for final goods at different price level. The…
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Q: Which of the following policies does not shift the aggregate supply curve to the right?
A: (1) The aggregate supply (AS) curve depicts the total supply of goods and services at each price…
Q: With reference to the Keynesian approach, explain the main components of aggregate demand
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A: In the classical model, the AS curve is fully inelastic. The AS angle is determined by supply-side…
Q: Which of the following help to explain why the aggregate demand curve slopes downward? a. When the…
A: Hi, In case of multiple questions in a post, we are required to do the first one. Kindly repost…
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A:
Q: The real wealth effect explains why the aggregate supply curve is horizontal in the long run.…
A: The real wealth effect explains that if the price level decreases, then the purchasing power of the…
Q: Determine whether each of the following would cause a shift of the aggregate demand curve, a shift…
A: When there is a change in price of the good, it causes movement along the demand or supply curve.…
Q: Which of the following will most likely cause a rightward shift in the aggregate supply curve? An…
A: The aggregate supply curve is the total of all the supply curves of the entire economy.
Q: Which of the following would shift the aggregate demand curve to the right? An increase in input…
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Q: In your own words, explain why aggregate demand is inversely related to the price level. Why does…
A: AD curve is downward sloping because of three effects: Pigou’s wealth effect: Since value of…
Respond to the following in a minimum of 175 words:
Explain the shape of aggregate demand curve.
How do Classical and Keynesian economists differ in their view of the
Discuss how the economy returns to equilibrium in response to changes in aggregate demand (AD) and aggregate supply (AS) in both the short run and long run.
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- Evaluate the following statements using relevant diagrams and provide detailedexplanations. The statements describe events that might shift aggregate demand (AD),aggregate supply (AS), both or neither. Clearly label your diagrams. A) A recent economic report suggests that consumer confidence has increased.B) Apple Inc. has announced a 50% discount on its new generation iPad devices foruniversity students.C) After a prolonged acceleration in economic activity, the government raises the rateof personal income tax.D) A continuing economic expansion has drawn in many working age people (andtheir families) from neighbouring countries in search of jobs and better lives.Evaluate the following statements using relevant diagrams and provide detailed explanations. The statements describe events that might shift aggregate demand (AD), aggregate supply (AS), both or neither. Clearly label your diagrams. A recent economic report suggests that consumer confidence has increased Apple Inc. has announced a 50% discount on its new generation iPad devices for university students After a prolonged acceleration in economic activity, the government raises the rate of personal income tax. A continuing economic expansion has drawn in many working age people (and their families)from neighbouring countries in search of jobs and better livesWhat effects would each of the following have on aggregate demand or aggregate supply? Justify your answer. In each case use a diagram to show the expected effects on the equilibrium price level and real output level in the economy. Assume that all other things remain constant and prices are inflexible downward. (a) A reduction in interest rates at each price level (b) A sizable increase in labor productivity. (c) The nation’s currency appreciates against its major trading partners .
- Aggregate Supply: Explain whether the economy is currently operating in the Keynesian, intermediate or neoclassical portion of the economy's aggregate curve. Also, point out a time when the economy may have been operating at another portion of the aggregate supply curve.Use an aggregate demand (AD) and aggregate supply (AS) model to respond to the following questions. Explain your answers. (a) Under what conditions does a reduction in Aggregate Demand benefit the economy? (b) Show how stagflation impacts the economy in the short-run.Figure 1: Hayek’s (Classical) AD-AS Model Economics Online. (n.d.). Aggregate Demand. Retrieved from http://economicsonline.co.uk/Managing_the_economy/Aggregate_demand.html Hayek says that markets will heal themselves and that government should not intervene. How does the AD-AS model reflect Hayek’s idea that governments cannot increase real GDP beyond the level that the free market economy is able to produce? Do you believe that the Hayek’s classical AD-AS model explain the factors that cause changes (shifts) in AS realistically? Why or why not? Figure 2: Keynes’s AD-AS Model Economics Online. (n.d.). Aggregate supply. Retrieved from http://www.economicsonline.co.uk/Managing_the_economy/Aggregate+supply.html 2.1. In Figure 2 above, what are the factors that may cause the aggregate demand to shift from AD to AD1? What is the difference between demand pull inflation, cost push inflation and recession? 2.2. In macroeconomics, the immediate short run is known as a length…
- In our Aggregate Demand and Supply model, a decrease in Aggregate Demand would cause which of the following in the short run? Group of answer choices a) neither deflation nor inflation b) deflation and recession c) inflation and economic growth d) inflation and recession e) deflation and economic growthSuppose our economy is in macroeconomic equilibrium (also called "general equilibrium") with an upward-sloping aggregate supply curve and a downward-sloping aggregate demand curve. An increase in aggregate demand will: Question 5 options: a) Increase aggregate supply. b) Decrease the price level. c) Causes the aggregate supply to shift to the right. d) Increase real GDP. e) Reduce the number of discouraged workers in the unemployment rate.Which of the following statements best describes the aggregate supply curve? A) The aggregate supply curve represents the relationship between the price level and the total output or real GDP in the macroeconomy. B) The aggregate supply curve represents the relationship between the inflation rate and the total output or real GDP in the macroeconomy. C) The aggregate supply curve represents the relationship between the inflation rate and the total demand or real GDP in the macroeconomy. D) The aggregate supply curve represents the relationship between the price level and the potential output or GDP in the macroeconomy.
- For each of the following, identify whether the aggregate demand (AD) or short run aggregate supply (SAS) curve moves, and the direction of the move. (a) A decrease in government spending (b) An increase in wagesConsidering the formula for Aggregate Demand (Also known as the product market) answer the following question:Name two macroeconomic variables (from this formula) that decline when the economy goes into recession, and explain why this happens?Name one macroeconomic variable (from this formula) that rises during a recession, and explain why this happens?Describe the change in aggregate supply that should result from each of the following changes in determinants. Assume that nothing else is changing besides the identified change. (In your answer, indicate whether the change will "Decrease" or "Increase" aggregate supply or have no effect.) (a) A rise in the average price of inputs; (b) An increase in worker productivity; (c) Government antipollution regulations become stricter; (d) A new subsidy program is enacted for new business investment in productive equipment; (e) Energy prices decline.