Price level (GDP deflator, 2009 = 100) The graph shows an economy's aggregate demand curve, short-run aggregate supply curve, long-run aggregate supply curve, and equilibrium. Draw the AD curve when it is correctly expected that the inflation rate will be 20 percent a year. Label it. Draw the SAS curve when a change to the money wage rate occurs that correctly anticipates the increase in aggregate demand. Label it. Draw a point at the new equilibrium. As we move up along the LAS curve, the A. real wage rate is constant B. real wage rate is increasing C. real wage rate is decreasing D. money wage rate is constant 130- 120- 110- 100 100- 90- LAS 13.0 SAS 0 AD 80- 11.5 12.0 12.5 13.0 13.5 14.0 14.5 15.0 Real GDP (trillions of 2009 dollars) >>> Draw only the objects specified in the question.

There is a decrease in wealth what will happen to price level and real GDP

Explain two ways in which a recession might raise the natural rate of unemployment (Macroeconomics field of question)

Start at full-employment (FE) equilibrium with flexible wages and worker misperception of price level changes in the short run. Suppose then that we have an increase in Aggregate Demand. First, think about the short-run effects on price level (P), output level (Q), wage level (W), employment (L), and unemployment (U)?             In the long run, once workers realize that there was a change in the price level, they will change the supply curve of labor. When all subsequent wage and price adjustments take place, we will be in a new long-run equilibrium. From the original full-employment (FE) equilibrium to the final one, what is the net change in the price level (P), output level (Q), the nominal wage (W), employment (L), unemployment rate (U), and the real wage (W/P)?   Group of answer choices a) An increase in P, no change in Q, no change in W, an increase in L, an increase in U and no change in W/P. b) An increase in P, a decrease in Q, a decrease in W, a decrease in L, an…

Explain each of the following in terms of how changes in the price level and the effect on Aggregate Quantity Demanded: The Real Balances Effect (in your text this is referred to as the Wealth Effect) The Interest Rate effect The Foreign Purchases effect (in your text this is referred to as the Foreign Prices effect)

The graph shows the aggregate demand (AD) curve and the long-run aggregate supply (LRAS) curve for a hypothetical economy. Suppose that the economy observes an increase in the human capital of workers, causing productivity to rise. Show the effect of this change by shifting one of the curves in the graph. LRAS How will this change affect the rate of inflation? Inflation will fall Inflation will rise, Inflation will be unchanged. AD How will this change affect the growth rate? Real GDP growth rate The growth rate will decrease. The growth rate will increase. The growth rate will be unchanged.

Price Level LRAS I о, он ог Real GDP SRAS, SRAS SRAS₂ ON=Natural Real GDP AD Refer to Figure 9-3. If the economy is in short-run equilibrium at point C, the (actual) unemployment rate is less than the natural unemployment rate. the (actual) unemployment rate is equal to the natural unemployment rate. the (actual) unemployment rate is greater than the natural unemployment rate. the relationship between the (actual) unemployment rate and the natural unemployment rate cannot be determined from the available information.

Q1. Phillip's Curve: For each of the following draw an AD-AS diagram and a corresponding Phillip's curve assuming the following: (1) actual RGDP is $9,200 (2) full employment RGDP is $10,000 (3) the natural rate of unemployment is 5%; (4) actual unemployment fluctuates around 5% a. Show in both diagrams the effect of an increase in government purchases that pushes actual RGDP up to full employment b. Again assume actual GDP is at $9,200, show in both diagrams the effect of the Federal Reserve bank selling versus buying treasury bonds to banks. c. Again assume actual GDP is at $9,200, show in both diagrams the effect of self-correction mechanism.

Because the long-term trend has been for prices to rise, adjusting Nominal GDP to Real GDP involves inflating the lower prices before the base year and deflating the higher prices after the base year. 1) True 2) False

A futures market trades contracts on the growth rate for nominal GDP. The contract pays $X to the buyer, where X is 100 times the growth rate in nominal GDP from last year to this year. For example, if nominal GDP grows by 1% over last year, the contract pays $100 (1 x 100). Nominal GDP last year was $28,909 billion. Contracts on the futures markets are currently selling for $513. What is the market's prediction for nominal GDP this year? Put your answer in billions. You may round to two decimal places.