The following graph shows an aggregate demand (AD) curve and a short-run aggregate supply (SRAS) curve for an economy. Suppose the economy is initially in a short-run equilibrium at P, and Real GDP is 25trillion. At some point, the economy experiences a decrease in wage rates. Adjust the following graph to show the effect of a decrease in wage rates on the economy. ? Price Level me 0 5 10 15 20 25 30 35 Real GDP (Trillions Dollars) SRAS AD 40 45 50 AD SRAS
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- Suppose the money market for some hypothetical economy is given by the following graph, which plots the money demand and money supply curves. Assume the central bank in this economy (the Fed) fixes the quantity of money supplied. Suppose the price level decreases from 150 to 125. Shift the appropriate curve on the graph to show the impact of a decrease in the overall price level on the market for money. Money Supply 15 12 4 Money Demand 3 5 10 15 20 MONEY (Billions of dollars) INTEREST RATE (Percent) 18 0 0 25 30 Money Demand Money Supply (?) Following the price level decrease, the quantity of money demanded at the initial interest rate of 9% will be supplied by the Fed at this interest rate. As a result, individuals will attempt to bonds and other interest-bearing assets, and bond issuers will realize that they restored in the money market at an interest rate of than the quantity of money their money holdings. In order to do so, they will interest rates until equilibrium isCan you inform from the graph the movement of the price level in the economy since the beginning of 2021? Explain GDP Were we ever in a recession during the period? How do you know?Briefly describe what will the US aggregate expenditure be affected (i.e., increase or decrease) by each of the following factors: (1) A decrease in US Government spending (2) An increase in US Consumers' spending (3) A decrease in US Exports (4) An increase in US Imports (5) US dollar appreciates (6) US interest rate becomes higher than other countries
- The following graph shows an economy's short-run aggregate supply curve (SRAS), current equilibrium aggregate price level (P₁), and real GDP ( Q₁). The economy currently has Natural Real GDP (QN) of $8 trillion. Use this information to place the orange long-run aggregate supply curve (LRAS, square symbols) in the correct position on the graph. PRICE LEVEL 10 P₁ 8 4 2 0 0 A 기 4 6 8 10 REAL GDP (Trillions of dollars) 2 The equilibrium A₁, shifting SRAS SRAS 12 14 own on the graph, reveals that re GDP (Q₁) is LRAS ? Natural Re GDP. As a result, wages will over time,Suppose the economy experiences a "supply shock" due to a fall in oil prices. As a result, the economy experiences a/an ___________in the price level and a/an _______in the level of output(GDP) Group of answer choices Decrease; decrease Increase; increase Decrease; increase Increase; decreasConsider the following AD-AS graph of country H. Price level (P) LL OF; E OF; A O B; C O B; A OB; E F LRAS E A D B SRAS3 AD₁ SRAS₁ SRAS2 AD2 Real GDP (Y) Country H is currently at point A. Consumer confidence increases and households increase consumption, then in the short run country H will move to point and in the long to point
- The following graph shows the aggregate demand curve (AD), the short-run aggregate supply curve (SRAS), and the long-run aggregate supply curve (LRAS) for a hypothetical economy. PRICE LEVEL 360 LRAS 300 240 180 120 60 0 0 4 8 12 16 REAL GDP (Trillions of dollars) Suppose the economy is in short-run equilibrium. The consistent with full-employment output. SRAS AD 20 20 24 ? of $4 trillion drives unemployment the unemployment rate Suppose public officials are concerned about the $4 trillion gap in the economy and the resulting higher-than-expected aggregate demand. The government has decided to follow a passive approach to policymaking.The graph below shows the AD-AS diagram for Spain. Suppose that the economy is initially in long-run equilibrium with the price level of 900. Now suppose that the Aggregate Demand (AD) curve shifts left from AD1 (blue) to AD2 (green). 1200 AD 1100 1000 Price Level ADS 900- 800 79R ST 600* 500 400 300 200- 100- LRAS 100 200 300 400 500 600 700 800 900 1000 1100 120 Real GDP Q 1. What is the new GDP in the short-run as a result of this shift? I 2. What is the new price level in the short-run as a result of this shift? 3. What is the price new long-run equilibrium as a result of this shift? 4. What is GDP in the new long-run equilibrium as a result of this shift? 5. What causes the economy to move from the short-run equilibrium to the new long-run equilibrium? O Decreased wages. O increased wages. O Increased prices. O Decreased prices.The following graph shows a decrease in aggregate demand (AD) in a hypothetical country. Specifically, aggregate demand shifts to the left from AD1AD1 to AD2AD2, causing the quantity of output demanded to fall at all price levels. For example, at a price level of 140, output is now $200 billion, where previously it was $300 billion. The following table lists several determinants of aggregate demand. Complete the table by indicating the change in each determinant necessary to decrease aggregate demand. Change needed to decrease AD Wealth (increase/ decrease) Taxes (increase/ decrease) Expected rate of return on investment (increase/ decrease) Incomes in other countries (increase/ decrease)
- What does it mean when the aggregate expenditure line crosses the 45-degree line? In other words, how would you explain the intersection in words?Use the following graph to answer the next question. Price Level AS3 AS₁ 0 Real Domestic Output, GDP Which of the following factors will shift AS₁ to AS2? AS₂ A) A decrease in business subsidies B) An increase in input prices OC) A decrease in business taxes D) An increase in real interest ratesThe table below shows aggregate demand and aggregate supply schedules in a hypothetical economy, Acadia. Aggregate Demand and Aggregate Supply Schedules for Acadia Real GDP PADO) (AD1) (ASo) (AS1) Price Level (2012 = 100) (2012 $ billions) 140 150 200 230 280 130 170 220 220 270 120 190 240 190 240 110 210 260 160 210 100 230 280 120 170 a. Draw a graph showing Acadia's ADO, AD1, ASo and AS1. Using the tools given below plot only the endpoints of the demand curves ADo and AD1. Plot all 5 points for each supply curve, ASo and AS1. ces Aggregate Demand and Supply for a hypothetical economy, Acadia 150 Tools 140 ADO AD1 130 120 ASo AS1 110 100 90 100 150 200 250 300 Real GDP (2012 $ billion) Price Level (GDP deflator 2012 = 100)