The figure below is a part of the AD-AS model as a description of the current situation of an economy.PPA=$10AYA=4000Ya. Find the short-run equilibrium (the real output and the price level) of this economy vb. We know that the natural level of output is 3500. Add the long-run supply curve onto the grapc. Graphically show how the economy would adjust to the long-run equilibrium, if the government doesnothingd. If the government aims to avoid inflation but can endure deflation, what should the government do toadjust the economy to a long-run equilibrium? Graphically show your answer. .

Part (a): Find the short-run equilibrium The short-run equilibrium occurs at the intersection of the…

Answered: The figure below is a part of the AD-AS…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Suppose that the economy is initially in long-run equilibrium with the price level of 800. Now suppose that the Aggregate Demand (AD) curve shifts left from AD1 (blue) to AD2 (green). 1200 ADX 1100- 1000 Price Level ADX 900- 800 700 600 50% RASI 400* 300- 200 100- LRAS 400 500 600 700 100 200 300 Real GDP What is the new price level in the short-run as a result of this shift? 800 900 1000 1100 120 a
Consider the following ADVAS diagram of the macroeconomy, with LRAS shown as the vertical curve, AD as the downward sloping curve and SRAS as the upward sloping curve Place a point at the current equilibrium Then, use the segment tool to draw a new SRAS curve (parallel and of equal size to the one shown here that shows the long run self-correction that will bring this economy back to long-run equilibrium Finally, place a point at the new long run and short librum using the point tool Segment - Radi Rest Price Level Real GDP (billions) Und
Please write on the space provided what happens to each variable -- indicate whether each variable increases, decreases, or remains unchanged. Please show in the graphs the initial equilibrium, short run equilibrium, and final long run equilibrium. If possible, please provide only two graphs, one for IS-LM and one for AD-AS that show all of the equilibrium positions Suppose the economy is initially in a long-run equilibrium. Starting from this position, assume that an exogenous shock such as the Covid 19 pandemic pushes the economy away from the equilibrium. Using the IS-LM and AD-AS framework, indicate what happens in the short run to output, unemployment, prices, interest rate, consumption, investments, and real money balances, as the economy moves from long-run equilibrium to short-run equilibrium. What economic condition is the economy in after the shock? __________________ Short-run Output ________________ Unemployment _________________ Prices…
On the following graph, use the black point (cross symbol) to show the short-run equilibrium. Then use the grey point (star symbol) to show the long- run equilibrium. PRICE LEVEL 120 110 100 1 LRAS REAL GOP In the short run, the price level is Natural Real GDP SRAS, SRAS, AD SRAS, AD AD₂ and Real GDP is ++ Short-Run Equilibrium ✡ Long-Run Equilibrium ? Natural Real GDP. In the long run, the price level is and Real GDP is A
Brent, the international oil marker, hit US$130 a barrel on 8th March 2022. The oil price is close to 90 per cent above their level at the same point in time last year. Suppose that the rise in oil price is permanent. It creates an inflation shock and, at the same time, reduces potential output. With the aid of AD-AS model, show the difference in the effects of the oil price increase on output and the inflation rate in the long run if the government does not engage in stabilization policy and if the government does engage in stabilization policy to keep the inflation level low. Please elaborate your answer verbally.
Which of the figures above illustrates an economy in long-run equilibrium? A) Figure A B) Figure B C) Figure C
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
[Diagram required] An economy is in long run equilibrium with AD = 700 – 0.25p and ASO 0.25p - w + 500. The wage rate is w = 500. Now AS = 0.75p – w + 500. Be prepared to upload an AD/AS/LAS diagram showing all short-run and long-run equilibria: A, C, D. In the long run, D, the new wage will be equal to: |
Why is price “stickiness” or “rigidity” important for understanding macroeconomic adjustments? How would policy recommendations be different if prices adjusted immediately?
Assume an ecomy operates in the intermediate range of its aggregate supply curve. State the direction of shif for the aggregate demand curve or aggregate supply curve for each of the following changes in conditions. What is the effect on the price level? On real GDP? On employment?
PLEASE ANSWER ALL PARTS OF QUESTIONS 1 AND 2.
Give typing answer with explanation and conclusion

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