Answered: What effects would each of the…

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter24: The Aggregate Demand/aggregate Supply Model

Section: Chapter Questions

Problem 3SCQ: The short run aggregate supply curve was constructed assuming that as the price of outputs...

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Question

What effects would each of the following have on aggregate demand
or aggregate supply, other things equal? In each case explain the expected
effects on the equilibrium price level and the level of real output, assuming
that the price level is flexible both upward and downward.

·
A sizable increase in labor productivity (with no change in
nominal wages).

·
An increase in exports that exceeds an increase in imports (not
due to tariffs).

Definition Video Definition Point where the demand and supply curves intersect. At the equilibrium price the quantity supplied of a good is equal to the quantity demanded. When the market is not in equilibrium, market surplus or market shortage occurs. The region that is above the price equilibrium indicates market surplus and the region below the price equilibrium indicates market shortage. Video

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