1. Refer to the figure below. An increase in interest rate would cause:Price level, PAD₂BADADOAggregate output, YA) the aggregate demand curve to shift from AD₁ to AD2B) the economy to move from Point A to Point BC) the aggregate demand curve to shift from AD₁ to ADoD) neither a shift of the aggregate demand curve nor a change in real GD³

Referenceshttps://www.investopedia.com/terms/a/aggregatedemand.asp

Answered: 1. Refer to the figure below. An…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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1. The basic aggregate demand and aggregate supply curve model help explain A) fluctuations in real GDP and the price level. B) long-term growth. C) price fluctuations in an individual market. D) output fluctuations in an individual market. 2. The demanded. shows the relationship between the price level and quantity of real GDP A) consumer price index B) aggregate expenditure line C) 45-degree line D) aggregate demand curve
3
Prepare a scratch paper in order to solve the following qu ions. The short run aggregate supply curve shifts leftward when costs of production increase O True False The aggregate demand curve is the total quantity of an economy's intermediate goods demanded at all price levels O True O False
Refer to the following figure 1. For this economy, if the actual price level exceeds theexpected price level, how much output will the economyproduce in the short-run? A)$17 trillionB)$17.2 trillionC)$16.7 trillionD) Both A and C.2. Given the situation in part (a), this economy wouldexperience A) a recessionary gap of $0.3 trillionB) an expansionary gap of $0.2 trillionC) neither a recessionary gap nor an expansionary gap.D) an expansionary gap of $17.2 trillion. 3. Given the situation in part (a), in this economy (circlethe letter representing the right answer below)A) the actual rate of unemployment would be less than thenatural rate of unemployment.B) the actual rate of unemployment would be above the naturalrate of unemployment.C) the actual rate of unemployment would be equal to thenatural rate of unemployment.D)none of the above.4. In this economy, given the situation in part (a), in thelong-run (circle the letter representing the right answerbelow)A) the nominal wage…
Which of the following would be one of the factors that shift the aggregate demand curve? A change in: Domestic resource availability O Prices of imported resources O Property values O Productivity
Determine whether each of the following would cause a shift of the aggregate demand curve, a shift of the aggregate supply curve, a shift in neither curve, or shift in both curves. If a shift is caused, indicate which curve shifts, and in which direction it shifts. What happens to aggregate output and the price level in each case? 4. The wages rate decreases.
Which of the following would cause the Aggregate Supply curve to move from AS to AS2 in the graph below? A) A general increase in energy and labor cost for businesses. B) A general decrease in labor cost for businesses. C) An increase in productivity. D) A federal government increase in spending.
3. Under what circumstances an aggregate demand curve would shift either to the right or left? Provide some real world examples.
Price level (P) LRAS SRAS2 SRAS, В A AD2 AD, Real GDP (7) Based on the graph, a decrease in Point D to Point A could cause the economy to move from government spending exports on apples restrictions from the Environmental Protection Agency on car production in the U.S. inflation the demand for consumer goods Question 8 Suppose housing values fell during the recession of 2008. Therefore, O the price level will fall as the aggregate demand curve shifts to the left.
3) Assume initially an economy is at its long run equilibrium. Then, consumerconfidence in this economy increases. What will happen to real GDP and aggregate price level inthe short run equilibrium following the increase in consumer confidence? Use the AggregateDemand – Aggregate Supply model to answer the question.
2. A rise in the equilibrium wage rate will result in what change in the ADIAS model? (Pick 1 Answer) A. The short-run aggregate supply curve will shift to the left. B. The equilibrium price will decrease.
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. (c) The government passes legislation that increases the rate of corporate taxes. (d) Inflation leads the central bank to increase the base interest rate.

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