Refer to the graphs. Which of the following best represents a negative demand shock when prices are inflexible?

Q: Consider the effects of Corona virus pandemic on the macro economy in Kenya. Suppose we assume that…

A: Large negative aggregate demand shock due to the effects of Corona virus pandemic is causes to a…

Q: If the economy experiences inflation and economic growth, this means that aggregate demand grows by…

A: When there is a positive/rightward shift in the AD(from AD0 to AD1), which is larger than the shift…

Q: Suppose that consumers become pessimistic about the future health of the economy. What will happen…

A: The Agrregate Demand plays an important role in framing the  correct policy for the economy. To…

Q: In the New Keynesian Model, assume that the goal of The Fed is to keep unemployment as low…

A: The open market purchase means that the central bank is purchasing the government bond in the market…

Q: What are supply shocks? Why are policy choices hard when there are negative supply shocks? Would you…

A: A supply shock occurs when an unexpected event alters the supply of goods or commodities, resulting…

Q: Draw an AD-SRAS diagram, where the economy is initially at equilibrium and input prices do not move…

A:

Q: Which of the following is considered a negative supply side shock? A an improvement in technology an…

A: While supply can refer to anything that is in high demand and sold in a competitive market, it is…

Q: If a natural disaster occurs in the US, this is an example of a A) stone cold shock B) negative…

A: A natural disaster is very likely to destroy resources like capital and human resources.

Q: How does the policy rate hitting a floor of zero lead toan upward-sloping aggregate demand curve?

A: The policy rate hitting a floor of zero leads to an upward-sloping aggregate demand curve due to the…

Q: What is the basic economic philosophy behind the conclusion that “a big shock to consumer spending…

A: Unemployment: - unemployment is that portion of the labor force that is able to do work and looking…

Q: Which of the following events will not cause a supply shock that would shift the aggregate supply…

A: A supply shock is any event or calamity which leads to a reduction in the aggregate supply of the…

Q: Sort the following shocks into aggregate supply or aggregate demand shocks. Remember that "shocks”…

A: "Aggregate supply indicates total units of commodities that firms produce and sell at a given price…

Q: Why is a period of stagflation part of the normal aftermath of a period of excessive aggregate…

A: Stagflation leads to high inflation combined with an increase in the unemployment and stagnant…

Q: In a time of crisis where there is a pandemic, policymakers try to encourage economic activity by…

A: The aggregate demand plays the critical role in maintaining the full employments level. The rise in…

Q: What is the fundamental tradeoff faced by The Fed when responding to a negative real shock? (Three…

A: A negative real shock is the events of an unexpected shock that tends to affect the fundamental…

Q: If there is an aggregate demand shock: a. The IS curve shifts to the right b. The IS curve shifts to…

A: Aggregate demand shows the negative relationship between the total amounts of real goods and…

Q: Suppose that there is a positive aggregate supply shock. Which graph most accurately shows how this…

A: The aggregate demand-aggregate supply model, more generally called the AS-AD model depicts the…

Q: Using a well-labelled diagram, explain what happens to Aggregate demand of a country like Kenya when…

A: When price of petroleum products increases,aggregate demand would decrease.

Q: ssume that the Australian economy originally starts at the long-run equilibrium. The shock in focus…

A: The entire amount of goods and services that enterprises are willing to sell at a given price in an…

Q: Explain the role of expectations in the macroeconomy.

A: Expectations means forecasting future from the available information and past experiences.

Q: Q.1.1 An increase in the price of oil is an example of a negative supply shock. Use the AD-AS model…

A: Given: An increase in the price of oil is an example of a negative supply shock.

Q: what is being illustarted in a shift in aggregate demand from AD0 to AD2?

A: The aggregate demand curve is a representation of the total level of demand for output in an…

Q: Market Watch, May 24, 2018 discusses, "what happens if the oil rally turns into an 'oil shock' ".…

A: Aggregate demand (AD) is the sum total amount of commodities and services demanded in an economy at…

Q: The oil price increase in 2007-08 was a negative supply shock. Would you define it as a temporary or…

A: Answer: Given that:     The oil price increase in 2007-08 was a negative supply shock. Would you…

Q: What are some examples of shocks that shift the AD curve? What about theAS curve?

A: Aggregate supply is the total amount of goods and services that firms are willing to sell at a given…

Q: Which of the following events would not involve a supply shock that would shift the aggregate supply…

A: Supply Shock: It is the event that alters the production cost, thereby, changes the production level…

Q: Explain why a supply shocks is most of the time believed to be temporary? And does not result in…

A: A supply usually shock occurs when the supply of a commodity or service suddenly increases or…

Q: An increase in the price of oil is an example of a negative supply shock. Use the AD-AS model graph…

A: AD(aggregate demand) is a negative sloping curve and AS(aggregate supply) is a upward sloping curve…

Q: Refer to the Figure B. Assuming this market is representative of the economy as a whole, a negative…

A: The economies tend to work upon the basis of the working of the forces of aggregate demand, and…

Q: “Policymakers would never respond by stabilizing output in response to a temporary positive supply…

A: The temporary supply shock leads to a shift in the aggregate supply curve down. This shift moves the…

Q: Give an example of a demand shock and a supply shock and show how it may push output and employment…

A: In an economy, demand and supply shocks refers to the situation when there is a sudden change in the…

Q: When aggregate output is below the natural rate of output, what happens to the inflation rate over…

A: Rate of Output (YN): Where all the factors of production efficiently use, while there is certain…

Q: The government of South Africa responded to the COVID 19 pandemic by implanting a number of…

A: The pandemic has slowed down the economy of the country. Resulting there is lower demand and high…

Q: If the economy begins at an equilibrium at potential output, a negative aggregate demand shock has…

A: The equilibrium price level and output in an economy are determined by the aggregate demand and…

Q: Starting with long run equilibrium, use the aggregate demand and aggregate supply model to…

A: The aggregation of supply curve of all the firms in the economy is known as the aggregate supply…

Q: ns increase. Steel workers go on strike for four weeks. Households and firms bec

A: A demand shock is a sharp and a sudden change in the demand for a service or product.A supply shock…

Q: A negative supply shock causes output to _____ and the price level to _____.

A: Negative supply shock refer to unexpected event that cause leftward shift in supply curve. This is…