the aggregate supply curve a. shows the level of real GDP produced in the economy at different possible price levels during a period of time b. is horizontal in the Keynesian range c. is vertical in the classical range d. all of these

the aggregate supply curve a. shows the level of real GDP produced in the economy at different possible price levels during a period of time b. is horizontal in the Keynesian range c. is vertical in the classical range d. all of these

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter14: Aggregate Demand And Supply

Section: Chapter Questions

Problem 6SQP

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Question

the aggregate supply curve

a. shows the level of real GDP produced in the economy at different possible price levels during a period of time

b. is horizontal in the Keynesian range

c. is vertical in the classical range

d. all of these

Definition Definition Total supply of goods and services in an economy at a certain price level in a specific time period.

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Assume an economy operates in the Keynesian (horizontal) range of its aggregate supply curve. For each of the following changes in conditions, state the direction of the effect on Aggregate demand, aggregate supply, price level and real GDP 1. A decrease in government expenditure in infrastructure 2. A severe recession occurs in a country, which has been a major importer 3. The federal government reduces business taxes 4.The central bank increases the cash interest rate.
The horizontal segment of the Keynesian aggregate supply curve: A.depicts a negative relationship between real GDP and the price level. B.shows that real GDP can increase only by affecting the economy’s price level. C.depicts a positive relationship between real GDP and the price level. D.shows that real GDP can increase without affecting the economy’s price level.
In the Keynesian model, which of the following events lead to an increase in aggregate demand? (This is a multiple answer question. One of more options may be correct) a. An increase in the sales tax b. A new infrastructure project by the Federal government c. An increase in value of the Euro relative to the US-Dollar d. A drop in business confidence.
Keynesian theory suggests that in the short run _________ a prices fluctuate significantly. b wages and prices are free flowing. c wages are based on supply and demand. d wages and prices are sticky.
The long-run aggregate supply curve shifts right if Answer immigration from abroad increases. the capital stock increases. technology advances. All of the above are correct.
If aggregate demand (AD) decreases, then output will increase; return to the previous level remain unchanged; increase increase; increase decrease; decrease decrease; return to the previous level in the short run and in the long run.
Which of the following would cause the aggregate supply curve to increase... Group of answer choices The government has reduced its spending by more than 10% over the last 2 years Throughout the economy, workers are using better equipment and output per hour is rising. Consumers are more confident and spending more than before. Energy prices such as gas and electricity have increased rapidly throughout the country.
a) Derive the aggregate supply curve according to new Keynesians. What is the impact of a positive demand shock on national income and price level in S-R and L-R? (use diagrams) b)
Along the long-run aggregate supply curve, the price level with decreases in aggregate demand. A) does not change B) increases C) decreases D) may increase, decrease, or remain unchanged
The long-run aggregate supply curve shifts right if immigration from abroad increases. the capital stock increases. technology advances. All of the above are correct.
An increase in demand in total demand in the Keynesian range of an aggregate supply curve will cause unemployment and deflation increase employment, output, and the price level. Increase the price level, but not employment and output. increase employment and output, but not the price level.
When in macroeconomics an economy ‘overheats’ it is observed that aggregate demand exceeds national income at the full employment output level. Within a ‘Keynesian cross’ framework this overheating is described as which of the following: (a) A Goldilocks effect; (b) A hyperinflation; (c) A recessionary gap; (d) An inflationary gap Please illustrate the correct answer via a diagram.