Price Level (CPI) LAAS Real GDP (trillions of 2007 dollars) Refer to Figure 11.9. Suppose the economy is in short-run equilibrium above potential GDP, the unemployment rate is very low, and wages and prices are rising. Using the static AD-AS model in the figure above, the correct Bank of Canada policy for this situation would be depicted as a movement from B to C. A to B. C to B. A to E. OC to D.
Q: Suppose that a price-searcher firm was going to use a first degree price discrimination strategy.…
A: The additional expense required by manufacturing one more unit of an item or service is known as the…
Q: Suppose a consumer with income I has preferences over consumption bu XY. Suppose th be represented…
A: Utility function : U = X1/5 Y4/5Price of X = 1Price of Y = 2 Income = I Budget Constraint : I =…
Q: The economy of Captiosus produces two goods: laptops and books. The quantity produced and the prices…
A: Gross domestic product measures the market value of final goods and services produced by a nation…
Q: The following four graphs represent four market scenarios, each of which would cause either a…
A: The supply curve is a graphic representation of the correlation between the cost of a good or…
Q: Describe the seven elements of organizational structure and explain the characteristics of…
A: The provided question has been answered from the perspective of 'Business Economics' and…
Q: Fill in the blanks to complete the passage about the time lags of fiscal policy. Drag word(s) below…
A: Fiscal Policy refers to the use of government revenue and expenditure to influence the overall…
Q: The island nation of Coconutistan recently suffered an unfortunate accident which took its water…
A: The price ceiling refers to the maximum price that can be charged for the good by the market. Price…
Q: Below is the information of the perfectly competitive market producing biscuits in city A. The…
A: There are 2000 identical firms in a perfectly competitive market. The marginal cost function of a…
Q: Suppose that the sales function for a product L has been estimated as:…
A: Demand is the desire of an individual ability and willingness to pay for a product. The demand is…
Q: One of the sources of monopoly power for a firm may be: 0000 diseconomies of scale. homogeneous…
A: The study and analysis of commercial barriers impacting firms using abstract economic concepts and…
Q: Assume that there are in the food company. The short-run supply curve for company 1 is given by Q1…
A: There are two companies in the food industry. The supply equation of both firms is identical as…
Q: Which of the following statements about price discrimination are true? Choose one or more: A. One…
A: Price discrimination: Price discrimination is discriminating with regard to the prices, In simple…
Q: Suppose that Alpha Inc., Richardson Industries, and K-Tek are the only three firms interested in a…
A: An auction is a way to sell things to the person who makes the highest offer. In an auction, buyers…
Q: a. area A +area B + area D. b. area A+ area B+ area C. Ocarea A+ area B. d. area D only. Figure 4-10…
A: The demand curve is the downward sloping curve. Supply curve is the upward sloping curve.…
Q: suppose that the production function is cobb douglas a. find the expression for k*, y* and c* as…
A: Economic growth theories have undergone notable transformations. Early theories, exemplified by…
Q: The following table shows Madison's utility from consuming popcorn and Coke. Suppose that Madison…
A: Money income should be utilized such that the last dollar spent on both goods is equal;Marginal…
Q: a. In the accompanying diagram, place the points labeled Minimum AVC and Minimum ATC in their…
A: The AVC curve, which shows the per-unit variable expenses a company faces at various output levels,…
Q: Using the labor market, production function. and AS/AD graphs of the classical model, show the…
A: The labor market is crucial in the intricate interaction of policy objectives. The ebb and flow of…
Q: It is commonly observed that prices are higher in small towns than in large cities for the same…
A: Demand and supply in a monopoly:In a monopoly, there is only one seller of a good or service. This…
Q: Suppose a firm's total cost function is TC(Q) = (Q-387)2 What is the efficient scale of production?…
A: Efficient scale of production refers to the level of output at which a company or a producer can…
Q: DI $0 10 20 30 40 50 (1) C $4 ▬▬▬▬▬▬▬▬▬▬▬▬▬ 1823 11 25 39 (2) DI C $0 $65 80 125 160 185 240 245 320…
A: Marginal propensity to consume (MPC) informs on how much more individuals prefer to spend for each…
Q: What kind of economic system does the following statement describe? Select the best answer. A…
A: An economy refers to a system of managing production consumption and distribution of goods and…
Q: Which of the following properties may not necessarily hold for Cobb-Douglas production functions? 1.…
A: The CD function of production is written as:
Q: has the recent decline in the US$ been benefical for canada comapnies exporting to the US Give…
A: Exchange rate fluctuations refer to the changes in the value of one currency relative to another…
Q: The following four alternative investments are being compared at MARR of 12%. Which investment is…
A: Net Present Value (NPV): This is the present value of cash inflows minus the present value of cash…
Q: What takes place when the economy reaches potential GDP and the aggregate supply becomes vertical?.…
A: This can be defined as a concept that shows the continuous progress in any nation it does not happen…
Q: 1. Assume that Hurricane Dorian destroyed thousands of crawfish traps. Explain and illustrate what…
A: Since you have posted multiple independent questions, according to our guidelines, only the first…
Q: The Orlando Magic is the National Basketball Association (NBA) professional basketball team that…
A: Total cost is the total cost incurred by a firm to produce a good or a service. Total cost includes…
Q: One forest has approximately 13.68% of trees containing infestations. If the researcher starts…
A: Since you have posted two independent questions, according to out guidelines, only the first…
Q: Exercise 4 A firm operates with production function q(L, K) = LK². The manager has been given the…
A: Production function : q = LK2Quantity to be produced = 8000Price of capital : r = 400Price of…
Q: Price $45 $35 $25 Quantity Demanded 600 700 800 Quantity Supplied 900 700 500 Use the table of…
A: The price ceiling refers to the maximum price that can be charged for the good by the market. Price…
Q: If Jackson's preferences over consumption bundles can be represented by the utility function U(X,Y)…
A: Utility function is U = 2X + YThe price of X is Px = 3The price of Y is Py = 1The Income is I =…
Q: Assume two firms are currently competing in a market. If one of the two firms wants to try to…
A: In competitive markets, firms often seek to gain an advantage over their rivals, and sometimes they…
Q: 3. Refer to the figure. Tax Revenue 0 M Tax Size a. What is curve from the figure called? b. If the…
A: A Laffer curve shows the relationship between the tax rate and the amount of tax collected by the…
Q: According to our discussions, how many rounds of fiscal stimulus have been enacted to mitigate the…
A: Fiscal measures act as a support during economic challenges, preventing downturns and fueling…
Q: The correct answer is not -2 If you think you've entered the right answer, check your spelling or…
A: Economics' concept of cross-price elasticity of demand, or simply cross-price elasticity, quantifies…
Q: Determine the equivalent value of x from the cash flow in G₁ i% ↑ X
A: Net Present Worth (NPW), also known as Net Present Value (NPV), is a financial metric used in…
Q: 1.Draw an ample reserves graph and show how the Federal Reserve bank can adjust during a recession.…
A: Ample Reserves during a RecessionDuring a recession, the Federal Reserve (or central bank) might…
Q: Is the healthcare industry "too big to fail?"
A: The concept of an industry being "too big to fail" has its origins in the financial sector, where…
Q: Suppose R(q) = 4q − q2 is a function that describes the revenue an individual can earn. Obviously,…
A: A revenue function calculates the total income generated from selling a specific quantity of goods…
Q: Place the orange line (square symbol) on the following graph to show the most likely long-run supply…
A: Supply curve is an upward sloping curve since there is a direct relationship between price and the…
Q: Using the information below, answer questions 1-3 Consider an economy that produces only three types…
A: Real GDP: It is a measure of an economy's total output or income, adjusted for inflation. Real GDP…
Q: A monopolist can produce at a constant marginal cost of c = 5 (that is cost of producing q units is…
A: In a monopoly market structure, There exists a single seller. There exists high barriers to entry…
Q: (a) Why will a Monopolist's Output increase, if the Government forces it to lower its Price? (b)…
A: Monopolist is a single seller. Monopolist is a price maker and can decide the price at which it…
Q: Suppose a monopolist can produce any level of output it wishes at a constant marginal cost of c=5.…
A: The study and analysis of financial challenges confronting firms using abstract economic concepts…
Q: 6. In the Cobb-Douglas production function Y = AK L, defining y = Y/L as output per k = K/L as…
A: The Cobb-Douglas production function is given below:Y = ĀK1/4L3/4Defining y = Y/L as output per…
Q: The shape of Ireland's production possibilities frontier (PPF) should reflect the fact that as…
A: Economic production is analogous to a symphony, in which resources come together to create richness.…
Q: Question : 1. You bought a new car for $42000. Assume the value of the car depreciates by 17% each…
A: Price of CAr =$42000Depreciation =17% Value of Car after 1 years = Value of car at year 0…
Q: Suppose that a market is described by the following supply and demand equations: Qs = 10P QD=150-20P…
A: Equilibrium occurs when demand and supply forces are equal. The price prevailing at equilibrium is…
Q: Two roommates, Eric and Noah, decide independently of each other how much time to spend cleaning the…
A: Nash equilibrium:It is a sub-topic of game theory in which players play games and use strategy and…
Step by step
Solved in 3 steps
- Answer the following questions using this table of information: Jun-2021 Sep-2021 Dec-2021 Price Index 118.8 119.7 121.3 Real GDP ($b) 20.7 20.3 21.0 Potential GDP ($b) 20.7 20.7 20.7 Draw the AD-AS model with a vertical long-run AS and upward-sloping short-run AS. Assume the economy is in long-run equilibrium Part 2 On the same diagram show a short-run supply shock that depicts the Australian economy in a short-run equilibrium in September 2021.Figure 16-1 Price level A) E to A. B) C to D. C) A to E. D) C to B. E) D to C. A Save LRAS D B E Real GDP Refer to Figure 16-1. Suppose the economy is in short-run equilibrium above potential GDP and no policy is pursued. Using the static AD-AS model in the figure above, this would be depicted as a movement from U SRAS AD 3 AD₂ AD₁Suppose the Thai economy is currently in a long-run (and thereby short run) equilibrium. Then, the Bank of Thailand (BOT) suddenly increases the money supply. (a) Describe the initial impact of this event in the AD-AS model by explaining whether and how any curve(s) shifts and to which direction. (b) How do the price level and the real GDP of Thailand change in the short run?
- Below is a graphical model of the AS-AD. In this model the initial level of the economy is at the low output and low inflation. Describe what happens to the economy when the BSP decides to lower interest rate and most likely this will lead to an increase in money supply thereafter. Price Level AS P1 P AD1 AD Y Y1 National income (real GDP) Copyright: www.economicsonline.co.uk Answer the following guide questions. Based on the graph above.. a.What happens to the aggregate demand? Describe your answer. b.What happens to the level of output? Describe your answer. c.What happens to the price level? Describe your answer. d. State your conclusion on the effect of the monetary policy made by the BSP.Price level (GDP deflator, 2009 = 100) The graph shows an economy's aggregate demand curve, short-run aggregate supply curve, long-run aggregate supply curve, and equilibrium. Draw the AD curve when it is correctly expected that the inflation rate will be 20 percent a year. Label it. Draw the SAS curve when a change to the money wage rate occurs that correctly anticipates the increase in aggregate demand. Label it. Draw a point at the new equilibrium. As we move up along the LAS curve, the A. real wage rate is constant B. real wage rate is increasing C. real wage rate is decreasing D. money wage rate is constant 130- 120- 110- 100 100- 90- LAS 13.0 SAS 0 AD 80- 11.5 12.0 12.5 13.0 13.5 14.0 14.5 15.0 Real GDP (trillions of 2009 dollars) >>> Draw only the objects specified in the question.Use the AS-AD model to analyze the impact on the U.S. economy as a result of each of the listed events. Mention if AD and/or AS shift and in which direction. Also explain what the country will experience with respect to increase or decrease in short-run equilibrium real GDP and increase or decrease in the equilibrium price level. For each event, assume that the economy is originally in a full- employment equilibrium, mention if in the new equilibrium there is a recessionary gap or an inflationary gap. A) Congress raises income taxes. B) The Federal Reserve decreases the target for the federal funds rate. C) Migration to the US increases the working- age population. DJ Appreciation in the international value of the dollar.
- The COVID-19 pandemic continues to present new challenges to the Australian economy. The Treasury has announced that they continue to support the economy by adding $41 billion in direct economic support, bringing total support since the beginning of the pandemic to $291 billion as of May 2021. Using a AD-AS graph, illustrate how this support would impact on economic growth and inflation in the short and long termThe graph below shows the AD-AS diagram for the US. Suppose that the economy is initially in long-run equilibrium with the price level of 700 (Red AD and SRAS curves). Now suppose that dollar depreciates. Price Level 1200 1100- 1000 900 800 700- 600* 500 400- 300- 200- 100 HITTE 100 200 300 400 500 Real GDP As a result of this event what is the new short-run price level? 600 700 800 900 1000 1100 120 QThe figure below is a part of the AD-AS model as a description of the current situation of an economy. PA=$10 P YA=4000 Y a) Find the short-run equilibrium (i.e. the real output and the price level thereof) of this economy. b) If the natural level of output is 3500, which one will be higher, the unemployment rate at point A, or the natural unemployment rate? Explain. c) Give two reasons as to why the short-run aggregate supply is upward sloping. d) Suppose the government takes no action about the situation indicated above. Explain, with the help of a figure properly labeled, what will happen in this economy in the long run. e) Describe the two kinds of macroeconomic policies that can be used in the situation described before part c). Indicate clearly in your description whether each policy is to the aggregate demand or aggregate supply or Further, give reason(s) as to why the government may want to use these policies rather than doing nothing.
- Suppose the economy is initially in a long-run equilibrium. Using the AD-AS framework, show graphically what happens to output, unemployment, and the price level when there is an adverse supply shock such as a persistent increase in international oil prices due to a war in oil producing countries (think of Russia's war with Ukraine). 1. Indicate in the space provided what happens to the following variables (whether it increases, decreases or remains unchanged) in the short run after the shock occurs, and in the final long run equilibrium. Short Run Eq. Output Unemployment Price Final Long Run Eq.* *Indicate below the direction of change in the variables as the economy moves from the short run to long run equilibrium and also the final values of Y and u. Show any changes in the graph as the economy moves from short run to long run equilibrium. Output Unemployment Price Graph: (use only one graph to show the initial, short run and long run equilibrium) 2. If the government wants to…Demand Pull Inflation: Suppose that the central bank wants to increase output, but the economy is already at the natural rate. (a) Show the short and long run effects of a monetary expansion (M t) in this sit- uation in the AD/AS model. You may omit the labor market and production function graphs and you should assume sticky prices for the SRAS. (b) As you can see from above (hint), in the long run output is unchanged but the price level is higher. What do you think would happens if the central banks tries this strategy over and over again? (c) Now assume that these repeated inereases in the money supply have caused expected inflation (r) to increase. Purthermore, assume the central bank stops its repeated increases of the money supply at the same time (assume M is constat). What is the effect of the inerease in inflation expectations on output, the real interest rate, and the price level in the short run?Need help with this. Please show how to move the AD and AS lines in both graphs. Also I provided the possible solutions for the last part. Thank you !
