i will 10 upvotes urgent Price LevelLASSAS,SAS,AD,SAS,AD₁AD,Real OutputRefer to the graph. Suppose the economy is at SAS2 and AD3. What is a possible way theeconomy can return to potential output? What dynamic price level feedback effect couldprevent the return to potential output? How would the dynamic price level feedback effect showup in the graph?O A decrease in wages in the economy; a decrease in wages would further decreaseAD; a shift in AD3 to the leftA decrease in material costs in the economy; a decrease in material costs woulddecrease AD; a shift in AD3 to the rightA decrease in wages in the economy; a decrease in wages would further decreaseAD; a shift in AD from AD2 to AD1A decrease in asset prices in the economy; a decrease in asset prices wouldfurther decrease AD; a shift in AD from AD2 to AD3

The objective of the question is to understand how the economy can return to potential output from a…

Answered: Price Level LAS SAS, SAS, AD, SAS, AD₁…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

If Aggregate Demand is at AD2, production will be high as possible. Can production stay at this level foever? Price Level Price Level GDP POTENTIAL AD₁ GDP POTENTIAL AS GDP MAX AD₁ AS GDP MAX AD2 GDP AD2 GDP Select one: O a. No, because eventually, higher aggregate demand will raise prices, and this will make some people less willing to do additional work Oc. All of these are true Od. Yes, because this is maximum production e. None of these are true O b. No, because eventually higher aggregate demand will cause prices to fall, and this will make producers decide to produce less
Consider the following graph. Suppose the economy is currently at point A. Suppose there is a temporary decrease in the prices of raw materials. (Raw materials are used for production.) The economy will go to point, in short run, and then point in long run. Price level O C; B OB;A OB; C O CA ODA Question 2 LRAS - O vertical straight; increase by 10 percent O upward sloping: decrease by 10 percent O vertical straight; remain unchanged O downward sloping: increase by 10 percent Odownward sloping: decrease by 10 percent SRAS₁ SRAS AD Real GDP (Y) 4 LRAS is a(n) line. If the price level drops by 10 percent, then all else being equal, the long- run quantity of aggregate supply will
Suppose that in the year 2010, Celestial Electronics planned toproduce 950,000 units of its portable GPS devices. Of the950,000 it planned to produce, a total of 25,000 units wouldbe added to the inventory at its new plant in Florida. Alsoassume that these units have been selling at a price of $100each and that the price has been constant over time. Supposefurther that this year the firm built a new plant for $5 millionand acquired $2.5 million worth of equipment. It had noother investment projects, and to avoid complications,assume no depreciation.Now suppose that at the end of the year, Celestial had produced950,000 units but had only sold 900,000 units and that invento-ries now contained 50,000 units more than they had at thebeginning of the year. At $100 each, that means that the firmadded $5,000,000 in new inventory.a. How much did Celestial actually invest this year?b. How much did it plan to invest?c. Would Celestial produce more or fewer units next year? Why
1dlankets F 360 320 G 280 240 200 ►K- 160 120 80 40 30 60 90 120 150 180 210 240 270 300 330 pillows Refer to the figure above. Which of the following could cause the economy's production to move from point H to point K? O a. an increase in unemployment in the economy O b.a shift in labor hours away from pillows towards blankets c. an increase in society's preferences for blankets O d. all of the above events (a - c) could cause this movement
When there are no unplanned inventory changes, the economy in a short run equilibrium and in a long nun equilibrium O a may or may not be; is O b. is, is not Oc. is; may or may not be O d. is; is also Starting from a long run equilibrium, if a sudden decrease in household wealith causes a shift in AD, the economy will experience: O a. the same level of prices and lower real GDP in the short run. O b. higher prices and lowerreal GDP in the short run. O e. lower prices and lower real GDP in the short run Od. lower prices and the same level of GDP in the short run. Which of the following is NOT one af the reasons for the slow adjustment of input prices? O a. Menu costs Ob. Increased productivity Oc. Inventories Od. Long-term contracts
QUESTION 7 Suppose a hurricane destroys 20% of the capital stock in a country. In the long run, output will O a. remain unchanged; remain unchanged O b. decrease; decrease c. decrease; increase O d. remain unchanged; increase O e. decrease; remain unchanged QUESTION 8 Menu costs help to explain: O a. why the long-run aggregate supply curve is horizontal. b. the negative slope of the aggregate demand curve. O c. why the long-run aggregate supply curve is vertical. O d. the negative slope of the aggregate supply curve. O e. the positive slope of the short-run aggregate supply curve. QUESTION 9 Suppose new drilling techniques increase the world oil supply. In the long run, output will O a. increase; remain unchanged a b. increase; increase C c. remain unchanged; remain unchanged O d. remain unchanged; decrease O e. increase; decrease and the price level will and the price level will
Suppose the long run potential output is given by the production function Yp = A*F(N,K) where A is the level of technology, N is the level of employment and K is the stock of capital. Which of the following is CORRECT? Higher interest rates would shift LRAS to the right O b. Growth in the labor force will shift LRAS to the right Oc An earthquake will shift LRAS (long-run aggregate supply) to the right O d. Improved technology will shift LRAS to the left
If price level is held constant and we decrease consumption, the aggregate demand curve will shift to theSelect one:O a. NortheastO b. SouthwestO cc Neither A nor B
Price level LRAS AS1 Figure 12.8 C B A ASO AS₂ AD₁ ADO E Y2 Yo Y₁ Aggregate output ($ billion) AD₂ Refer to Figure 12.8. This economy cannot continue to produce Y₁ (or at point B) because O the price of raw material will increase, shifting the aggregate demand curve to AD2. O all of the above O the price of raw material and wages will increase shifting the aggregate supply curve to AS₁. O the price of inputs will decrease, shifting the aggregate supply curve to AS2.
Imagine that technology gets better, so that production is faster and makes fewer mistakes. The result in the short run would be in real in the price level and output. (We'll consider this scenario again in the next question.) O an increase; a decrease O an increase; no change O None of the listed options is correct. O no change; an increase O a decrease; an increase
Price Level LAS SAS, SAS, AD SAS, AD, AD, Real Output Refer to the graph. Suppose the economy is at SAS, and AD₂. What is a possible way the economy can return to potential output? What dynamic price level feedback effect could prevent the return to potential output? How would the dynamic price level feedback effect show up in the graph? O A decrease in asset prices in the economy; a decrease in asset prices would further decrease AD; a shift in AD from AD2 to AD3 O A decrease in material costs in the economy; a decrease in material costs would decrease AD; a shift in AD from AD2 to AD1 A decrease in wages in the economy; a decrease in wages would further decrease AD; a shift in AD from AD2 to AD3 A decrease in wages in the economy; a decrease in wages would further decrease AD; a shift in AD from AD2 to AD1
Refer to the information provided in Figure below to answer the question that follow. Price level C E Select one: O B 40. D AD¹ ADO -AD² Aggregate output (Y) Refer to Figure An aggregate demand shift from AD2 to ADO can be caused by a. a decrease in the price level. b. a decrease in money supply. c. an increase in the price level. d. a decrease in taxes.

SEE MORE QUESTIONS

Recommended textbooks for you

ENGR.ECONOMIC ANALYSIS

Economics

ISBN:

9780190931919

Author:

NEWNAN

Publisher:

Oxford University Press

Principles of Economics (12th Edition)

Economics

ISBN:

9780134078779

Author:

Karl E. Case, Ray C. Fair, Sharon E. Oster

Publisher:

PEARSON

Engineering Economy (17th Edition)

Economics

ISBN:

9780134870069

Author:

William G. Sullivan, Elin M. Wicks, C. Patrick Koelling

Publisher:

PEARSON

ENGR.ECONOMIC ANALYSIS

Economics

ISBN:

9780190931919

Author:

NEWNAN

Publisher:

Oxford University Press

Principles of Economics (12th Edition)

Economics

ISBN:

9780134078779

Author:

Karl E. Case, Ray C. Fair, Sharon E. Oster

Publisher:

PEARSON

Engineering Economy (17th Edition)

Economics

ISBN:

9780134870069

Author:

William G. Sullivan, Elin M. Wicks, C. Patrick Koelling

Publisher:

PEARSON

Principles of Economics (MindTap Course List)

Economics

ISBN:

9781305585126

Author:

N. Gregory Mankiw

Publisher:

Cengage Learning

Managerial Economics: A Problem Solving Approach

Economics

ISBN:

9781337106665

Author:

Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:

Cengage Learning

Managerial Economics & Business Strategy (Mcgraw-…

Economics

ISBN:

9781259290619

Author:

Michael Baye, Jeff Prince

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS