ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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In the AD/AS model, what prevents the economy from achieving equilibrium at potential output?
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- Will the shift of SRAS to the right tend to make the equilibrium quantity and price level higher or lower? What about a shift of SRAS to the left?arrow_forwardUsing the AD-AS model, which of the following statement better describe what has happened with the pandemic? a. The government discouraged people from engaging in economic activities, which shifted the AD curve left; meanwhile, the government forced the closure of most of the firms in the economy, which shifted the short-run AS curve left, leading to much lower production in the overall economy. b. The government discouraged people from engaging in economic activities, which shifted the AD curve left; meanwhile, the government forced the closure of most of the firms in the economy, which shifted the short-run AS curve left, leading to a lower natural rate of output in the overall economy. c. The government discouraged people from participating in economic activities, which shifted the AD curve right, causing a higher price level for the firm to produce more goods and services. Hence, the short-run aggregate supply shifts to the left, leading to much lower…arrow_forwardIn 2020, the COVID-19 struck and disrupted the world. As a result of this virus, we saw a decrease in Aggregate Demand, which lead to our production to nearly halt in several industries. For this discussion, your task is to: Think about some industry or type of firm that you have knowledge about and explain how that industry has been affected by COVID-19. Then explain how this impact could demonstrated in our AD/AS model.arrow_forward
- Suppose Mexico, one of our largest trading partners and purchaser of a large quantity of our exports, goes into a recession. Use the AD/AS model to determine the likely impact on our equilibrium GDP and price level.arrow_forwardIs ‘zero unemployment’ desirable? Explain Define the three ranges of the aggregate supply curve in the AD/AS framework.arrow_forwardIn the AS/AD model, what are the main differences between the neoclassical perspective and the Keynesian perspective?arrow_forward
- Discuss how the AD/AS model can explain economic growth, recessions, as well as changes in unemployment and inflationary pressures. (11.5)arrow_forwardWhere does GDP fit into an AD/AS model?arrow_forwardPlease see below. These are true or false questions. 1). The aggregate supply curve will shift left as the price of key inputs rises, and will shift out to the right if the price of key inputs falls. 2). Long-term economic growth is illustrated in the AD/AS framework by a gradual shift of the aggregate supply curve to the left.arrow_forward
- We often use the SRAS/AD model to describe which of the following? short run economic fluctuations long run economic trends the effect of changes in the money supply on the interest rate the trade balancearrow_forwardWhat policy changes would Keynes recommend to counteract a recession?arrow_forwardSuppose the level of structural unempoyment increase. How would the increase in structural unemployment be illustrated in the AD/AS model. Hint: How does structural unemployment affect potential GDP?arrow_forward
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