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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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: |
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?
Take a look again at Figure 1 (originally from the page in the text titled "Neoclassical and Keynesian Perspectives in the AD-AS Model.") Price Level Pn Pi Pk ADK AD Yk ADn Ek Keynesian zone Real GDP Ei LRAS En SRAS Neoclassical zone Intermediate zone Yi Yn Figure 1. Keynes, Neoclassical, and Intermediate Zones in the Aggregate Supply Curve. Near the equilibrium Ek, In the Keynesian zone at the far left of the SRAS curve, small shifts in AD, elther to the right or the left, will affect the output level Yk, but will not much affect the price level. In the Keyneslan zone, AD largely determines the quantity of output. Near the equilibrium En. In the neoclassical zone at the far right of the SRAS curve, small shifts in AD, elther to the right or the left, will have relatively little effect on the output level Yn, but Instead will have a greater effect on the price level. In the neoclassical zone, the near-vertical SRAS curve close to the level of potential GDP largely determines the…
Give typing answer with explanation and conclusion
Do you believe that the Hayek’s classical AD-AS model explain the factors that cause changes (shifts) in AS realistically? Why or why not?
Macroeconomics - Keynesian Math
On the graph, label your starting AD line as AD 2019. Draw a new AD line showing the change to AD due to the pandemic. Label your starting SRAS line as SRAS 2019. Draw a new SRAS line showing the change to supply due to the pandemic.Label the new short-run equilibrium RGDP and Price Level. Does output (i.e. RGDP) increase or decrease in your model? Does the price level increase or decrease in your model? According to the AD-AS model when RGDP falls the unemployment rises and vice versa. Does your graph indicate an increase or decrease in the unemployment rate
"Fracking" is a relatively new technology that allows drillers to extract significantly larger quantities of natural gas from existing deposits than was previously possible. How is this discovery likely to affect the economy? (Hint: Think about whether this will have a short-run or long-run effect.) This discovery will likely: O increase both SRAS and LRAS, leading to a long-term increase in output and decrease in prices. O increase AD but decrease both SRAS and LRAS, leading to an uncertain change in long- term output and a decrease in prices. decrease both SRAS and LRAS, leading to a long-term decrease in output and increase in prices. O increase AD, SRAS, and LRAS, leading to a long-term increase in output and an uncertain change in prices.
Consider the graph at right. The economy is initially in short-run equilibrium at point D and worker wages adjust to the economic conditions. Move the cursor on the graph at night to the new short-run equilibrium point Price level, P P2 P1 PO AS(long run 4 hamma AS (short run) AS AD₁ AD YO Y1Y2 Aggregate output (income), Y
Along the long-run aggregate supply curve, the level of Real GDP supplied with increases in the price level. O does not change O increases O decreases slightly O decreases dramatically
Suppose the economy is in the long-run equilibrium. b. Now suppose war in the world's main oil- producing region sharply reduces the world oil supply, causing oil prices to rise and increasing the costs of producing goods and services in this economy. Use your diagram to show what happens to output and the price level in the short run. c. Use the sticky-wage theory of aggregate supply to explain what will happen to output and the price level in the long run (assuming there are no policy changes). What role does the expected price level play in this adjustment? Be sure to illustrate your analysis in a graph.

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