Principles of Economics, 7th Edition (MindTap Course List)
7th Edition
ISBN: 9781285165875
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 33.2, Problem 2QQ
To determine
How does an economy's behavior in short run differs from the long run.
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11. Using aggregate demand, short-run aggregate supply,
and long-run aggregate supply curves, explain the proc-
ess by which each of the following economic events will
move the economy from one long-run macroeconomic
equilibrium to another. Illustrate with diagrams. In
each case, what are the short-run and long-run effects
on the aggregate price level and aggregate output?
a. There is a decrease in households' wealth due to a
decline in the stock market.
b. The government lowers taxes, leaving households
with more disposable income, with no correspond-
ing reduction in government purchases.
3. In macroeconomy how and where we will get the equilibrium level with the help of aggregate demand and aggregate supply?
3.
Explain how each of the following will affect aggregate demand. In each case, draw a
diagram to show the effect on the aggregate demand curve.
(a) Negative economic indicators cause firms to become pessimistic about the
future of the economy.
(b) Banks become complacent and begin taking on riskier business loans at lower
interest rates.
(c)
The government passes legislation that increases the rate of corporate taxes.
(d)
Inflation leads the central bank to increase the base interest rate.
Chapter 33 Solutions
Principles of Economics, 7th Edition (MindTap Course List)
Ch. 33.1 - Prob. 1QQCh. 33.2 - Prob. 2QQCh. 33.3 - Prob. 3QQCh. 33.4 - Prob. 4QQCh. 33.5 - Prob. 5QQCh. 33 - Prob. 1QRCh. 33 - Prob. 2QRCh. 33 - Prob. 3QRCh. 33 - Prob. 4QRCh. 33 - Prob. 5QR
Ch. 33 - Prob. 6QRCh. 33 - Prob. 7QRCh. 33 - Prob. 1QCMCCh. 33 - Prob. 2QCMCCh. 33 - Prob. 3QCMCCh. 33 - Prob. 4QCMCCh. 33 - Prob. 5QCMCCh. 33 - Prob. 6QCMCCh. 33 - Prob. 1PACh. 33 - Prob. 2PACh. 33 - Prob. 3PACh. 33 - Prob. 4PACh. 33 - Prob. 5PACh. 33 - Prob. 6PACh. 33 - Prob. 7PACh. 33 - Prob. 8PACh. 33 - Prob. 9PACh. 33 - Prob. 10PA
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- If aggregate supply is vertical, what role does aggregate demand play in determining output? In determining the price level?arrow_forward2. Describe the concept of aggregate demand and aggregate supply?arrow_forward1. How many recessions did the US economy experience between 1929 and 2020? What were the four longest recessions between 1929 and 2019, not including the COVID-19 recession? What were the three deepest recessions between 1929 and 2019? That is, during which three recessions was the decline in real GDP biggest from peak to through? How long did the COVID-19 recession last?arrow_forward
- 2. What impact would a change that shifts an economy’s production possibilities curve outward have on the long-run aggregate supply curve? How have improvements in computer technology affected production possibilities and the long-run aggregate supply curve?arrow_forward3. What role do imports play in aggregate demand? Under which conditions will changes in imports expand aggregate demand? Reduce aggregate demand?arrow_forwardSpecific subject - Macroeconomic Analyse the case of a negative supply shock caused by an increase in oil prices and compare with the shock caused by the Covid pandemic. What would be the similarities and differences between the two shocks? What would be the effect of an expansionary economic policy (increase in aggregate demand)? Graph What measures or government intervention would be most appropriate to deal with both types of shocks? Graph Compare the adjustment in both cases with and without government intervention. Grapharrow_forward
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