Price level (GDP deflator, 2009 = 100)The graph shows an economy's aggregate demand curve, short-run aggregatesupply curve, long-run aggregate supply curve, and equilibrium.Draw the AD curve when it is correctly expected that the inflation rate will be 20percent a year. Label it.Draw the SAS curve when a change to the money wage rate occurs that correctlyanticipates the increase in aggregate demand. Label it.Draw a point at the new equilibrium.As we move up along the LAS curve, theA. real wage rate is constantB. real wage rate is increasingC. real wage rate is decreasingD. money wage rate is constant130-120-110-100100-90-LAS13.0SAS0AD80-11.512.0 12.5 13.0 13.5 14.0 14.5 15.0Real GDP (trillions of 2009 dollars)>>> Draw only the objects specified in the question.

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Answered: Price level (GDP deflator, 2009 = 100)…

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter8: Aggregate Demand And Aggregate Supply

Section: Chapter Questions

Problem 2WNG

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The graph shows an aggregate demand curve. Draw a curve that shows the effect on aggregate demand of an increase in the expected future inflation rate. Label it. 140- 130- 120- 110- 100- 90- Price level (GDP deflator, 2009=100) AD 99 80+ 11.0 11.5 12.0 12.5 13.0 13.5 14.0 14.5 15.0 Real GDP (trillions of 2009 dollars)
Suppose both nominal GDP rises by 10 percent and real GDP rise by 2percent. What has happened to the general price level? What is the inflationrate? Show your calculation.
If a decrease in the price level does increase the real value of wealth, this is a reason for the .downward slope of the aggregate demand curve
Below is a graphical model of the AS-AD. In this model the initial level of the economy is at the low output and low inflation. Describe what happens to the economy when the BSP decides to lower interest rate and most likely this will lead to an increase in money supply thereafter. Price Level AS P1 P AD1 AD Y Y1 National income (real GDP) Copyright: www.economicsonline.co.uk Answer the following guide questions. Based on the graph above.. a.What happens to the aggregate demand? Describe your answer. b.What happens to the level of output? Describe your answer. c.What happens to the price level? Describe your answer. d. State your conclusion on the effect of the monetary policy made by the BSP.
Suppose that in 2005, nominal wages decrease in Torania. Show how this event will change equilibrium output and price level by shifting either the SRAS or AD curve.
Use aggregate demand and aggregate supply to explain the inverse relationship between inflation and unemplyment
on 5 of 25 > Classify the statements as true or false by placing them in the correct category. True Deflation often results in a decrease in aggregate demand. Answer Bank Deflation is a theoretical possibility but almost never occurs. Deflation is when the rate of inflation decreases. Answer Bank False Deflation occurs when the aggregate price level falls. Deflation does not affect people in the economy uniformly. Some people are made better off and others are made worse off.
Diagrammatically represent the effect on the price level and real GDP in the short run of each of the following : a. An increase in wealth b.an increase in wage rates C. An increase in labour productivity
Explain how real GDP is determined when the price level is fixed.
The index of the general price level can be seen in two distinct ways. What are these two alternative ways of viewing the index?
What causes the economy to be in disequilibrium for a while? How does an economy adjust back to equilibrium? What does it mean to graph the effects of an un anticipated increase in the price level on the AD-AS (aggregate demand/supply) graph?
Assume an economy operates in the intermediate range of its AS curve (upward sloping AS curve). State the direction of shift in the AD or the AS curve for each of the following changes and the impact of that change on the price level, on GDP, and on employment. a) a rise in the price of crude oil b) an increase in the spending on national defense c) an increase in the cost of imported goods d) an improvement in labor productivity

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