Starting from long-run equilibrium, graphically illustrate and explain what happens to RGDP, the average price level, and unemployment if consumer confidence decreases.
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Starting from long-run equilibrium, graphically illustrate and explain what happens to RGDP, the average
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- Which of the figures above illustrates an economy in long-run equilibrium? A) Figure A B) Figure B C) Figure CSuppose that the U.S. economy is at full employment when strong economic growth in Asia increases the demand for U.S.-produced goods and services. How the U.S. price level and real GDP will change in the short run?Economic activity fluctuates in the short-run. Why is this the case? Please explain
- Economic activity fluctuates in the short-run. Why is this the case?Assume that the United States economy is currently in a recession in a short-run equilibrium. Draw a correctly labeled graph of aggregate demand and aggregate supply in the recession and show each of the following. The long-run equilibrium output, labeled YfSuppose that M = 2000 and that k = 2. What is the price level P at which the economy is in long-run- equilibrium? Plot such an equilibrium on a diagram with P on the vertical axis and Y on the horizontal axis, by distinguishing between the short-run and the long-run equilibrium.
- In the long-run, aggregate supply is a horizontal line at the long-run price level people can afford. True False One reason for why the aggregate demand curve slopes down is the wealth effect, which means that a higher price level leads to lower real wealth and, thereby, reduces the level of consumption. True FalseThe figure shown displays various economic outcomes. P₁ P₂ P3 PA Ps LRAS AD₁ SRAS₁ SRAS₂ SRAS3 AD3 AD₂ 글 E If the aggregate demand (AD) curve shifts from AD₁ to AD2, the resulting equilibrium price and output in the long run would be:LRAS, LRAS₂2 A. B. C. D. E. A B C E D LL AD₁ SRAS₁ W SRAS2 AD2 Real GDP (Y) Based on the figure, which of the following would cause the long-run equilibrium point to change from point B to point D? The population has aged and there are fewer people in the labor force. Firms and workers expected the price level to rise. The economy experienced an increase in government spending. The economy was in an expansion and has adjusted. The country's overall productivity increased.
- Assume that the United States economy is currently in a recession in a short-run equilibrium. Draw a correctly labeled graph of aggregate demand and aggregate supply in the recession and show each of the following. The current equilibrium output and price levels, labeled Ye and PLe, respectively.Problem 2. Consider the following economy. The aggregate demandcurve is given as: Y=300–2P. The aggregate supply curve is derived from the sticky-price model. The fraction of the firms with sticky prices is s while the fraction of the firms with flexible prices is (1-s). Assume s=0.5. The firms with flexible prices set their prices following: p/=P+(Y-Y ) The firms with sticky prices set their prices following: p==EP.For each of the following economic events, analyze the short-run and long-run transitions of the economy without and with government intervention. For each question, start from the initial long run equilibrium, point A. G point D, point C point E, point B SRAS Q10. There is a sudden decrease in oil price. Without government intervention, this would move the economy from point A to in the long run in the short run, then to point G, point A point G, point B AD₂
