Some politicians have suggested tying the minimum wage to the consumer price index (CPI). Applying the concept from Aggregate Demand and Aggregate Supply , what effects would this policy most likely have on output, the price level, and employment? Explain why

Q: Why unemployment results when Aggregate Demand is lesser than Aggregate Supply in the economy?

A: Aggregate demand refers to the total demand for the finished goods and services in an economy—the…

Q: As a result of the change in real GDP, will an increase in the interest rate on bank loans lead to…

A: The increase in the real GDP and the increase in the interest rate are two different factors. When…

Q: Suppose the Federal Reserve begins to increase the supply of money at an increasing rate. What…

A: The money supply refers to the flow of money into the economy or the supply of money into the…

Q: Why do consumers mostly gain little buying power during a deflation? Firms refuse to drop prices.…

A: A decrease in the average price level of all goods and services over time in a particular economy is…

Q: 6. Why the aggregate supply curve slopes upward in the short run In the short run, the quantity of…

A: Introduction The reason behind the upward sloping of the aggregate supply curve is sticky price. The…

Q: Which of the following does the slope of the aggregate demand curve indicate? As the price level…

A: Aggregate demand refers to the overall demand for goods and services in an economy. Aggregate supply…

Q: Suppose that aggregate supply curve is shifting to the right by 2.5 percent a year. If aggregate…

A: The whole offer of products and services created within an economy at a precise overall worth in a…

Q: How is the aggregate supply curve affected by (a) minimum wage laws (b) Social Security payroll…

A: Hey, Thank you for the question. According to our policy, we can only answer 3 subparts per…

Q: Explain how the aggregate demand curve is derived.

A: The aggregate demand shows the relationship between price level and quantity demanded. That is,…

Q: Suppose that a decrease in the demand for goods and services pushes the economy into recession. What…

A: The demand is the main factor that determines the developments in the economy. The increased demand…

Q: Which affect both the long-run and short-run aggregate supply curves? Choose all that apply. Group…

A: The LRAS curve and the SRAS curve depict the total output produced in an economy (Q) and the price…

Q: The U.S. state of Maryland banned use of hydraulic fracturing to extract oil and gas in 2017. How…

A: The price level is the average of current prices over the entire spectrum of goods and services…

Q: What shape is the long-run aggregate supply curve? Why does it have this shape?

A: An economy attains equilibrium when aggregate demand is equal to the aggregate supply.

Q: I can't find anything to back up that a decrease in aggregate demand causes cost push inflation. My…

A: Answer: Cost-push inflation: cost-push inflation is caused by an increase in the cost of wages and…

Q: In a new initiative to promote exercise, the Australian government spends a lot of money building…

A: Here, it is given that the government increases its expenditure  on building and renovating parks to…

Q: How do changes in government spending and taxes affect the equilibrium price level and real GDP?

A: In an economy, equilibrium level of real GDP is determined by the intersection of aggregate demand…

Q: Which of the following is a true statement? The average price of goods and services in an economy is…

A: The aggregate price level, also known as the price level or overall price level, refers to the…

Q: Members of Congress are interested in increasing the minimum wage from its current rate of $7.25 an…

A: A minimum wage law gives rise to unemployment in the economy as the wage set by the government is…

Q: Unemployment can be caused by a decrease of aggregate demand OR a decrease of aggregate supply.  Do…

A: Change in both aggregate demand and aggregate supply have impact on price level, employment and real…

Q: Explain in detail why the aggregate short-run aggregate supply curve is upward sloping?

A: According to classical macroeconomic theory, the aggregate supply curve is perfectly vertical in the…

Q: Draw a conventional aggregate demand curve on a graph. Then add three different aggregate supply…

A: Answer: The graph is given below: According to the above figure, the x-axis measures the output,…

Q: The computer industry developed a new technology that reduces the number of resources used to build…

A: Aggregate demand: Aggregate demand can be defined as the sum total of all the goods and services…

Q: What causes the aggregate supply curve to have an upward slope in the short run, but a vertical…

A: Total supply of goods and services produced at a given price in a given period of time within an…

Q: he graph shows an aggregate demand curve. raw a curve that shows the effect on aggregate demand fan…

A: Aggregate demand is the sum of consumption, investment, government spending and net export. AD = C +…

Q: Suppose the economy produces real GDP of $45 billion when unemployment is at its natural rate. Use…

A: The long-run supply curve is the vertical line parallel to the Y axis, The point it touches the…

Q: The following events shift either aggregate demand, aggregate supply, both or neither. Using a…

A: The equilibrium price is set up where the aggregate demand and aggregate supply are equal.

Q: Give examples of the factors that shift the Aggregate Demand Curve.

A: Aggregate demand is the sum of Consumption, Investment , government spending.  So,  AD = C + I + G.…

Q: aggregate demand and aggregate supply

A: The aggregate demand (AD) curve represents the total quantity of goods and services demanded in the…

Q: If firms become more optimistic about the future of the economy and, at the same time, innovation in…

A: When the economy as well as the people in the economy becomes optimistic about the future, then they…

Q: The most likely explanation for why the price index is rising is because   People are receiving…

A: Price indices are the methods through which the level of price increase or price decrease is gauged…

Q: Summarizes various factors that causes change in aggregate demand

A: Aggregate demand implies the total amount of products and services that households, businesses,…

Q: What effect will each shift have on price levels and quantities? Decrease in Aggregate Demand…

A: Aggregate demand shows the total quantity of goods and services demanded at different price levels.…

Q: ework (Ch 20) ppose the Fed doubles the growth rate of the quantity of money in the economy. In the…

A: The answers are - The inflation rate The price level

Q: The following graph shows the aggregate demand curve in a hypothetical economy. Assume that the…

A: Above concept is based on downward sloping of demand curve.When the good of a price increases the…

Q: Like the supply curve for individual goods and services, the aggregate supply curve slopes upward…

A: Meaning of Supply: The term supply refers to the situation where the seller sells his products at…