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the price In the short run, the increase in consumption spending associated with the stock market expansion causes the price level to level people expected and the quantity of output to the natural level of output. The stock market boom will cause the unemployment the natural rate of unemployment in the short run. rate to Again, the following graph shows a hypothetical economy experiencing long-run equilibrium at the expected price level of 120 and natural output level of $300 billion, prior to the increase in consumption spending associated with the stock market expansion. Along the transition from the short run to the long run, price-level expectations will curve will shift to the and the

the price In the short run, the increase in consumption spending associated with the stock market expansion causes the price level to level people expected and the quantity of output to the natural level of output. The stock market boom will cause the unemployment the natural rate of unemployment in the short run. rate to Again, the following graph shows a hypothetical economy experiencing long-run equilibrium at the expected price level of 120 and natural output level of $300 billion, prior to the increase in consumption spending associated with the stock market expansion. Along the transition from the short run to the long run, price-level expectations will curve will shift to the and the

Principles of Economics 2e
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter24: The Aggregate Demand/aggregate Supply Model
Section: Chapter Questions
Problem 44CTQ: If new government regulations require firms to use a cleaner technology that is also less efficient...
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Using the graph, illustrate the long-run impact of the stock market boom by shifting both the aggregate demand (AD) curve and the short-run aggregate supply (AS) curve in the appropriate directions. PRICE LEVEL 240 200 160 120 80 40 0 100 200 300 400 OUTPUT (Billions of dollars) AS AD 500 600 In the long run, due to the stock market boom, the price level output, and the unemployment rate the natural rate. 0 2 0 2 , the quantity of output the natural level of
Transcribed Image Text:Using the graph, illustrate the long-run impact of the stock market boom by shifting both the aggregate demand (AD) curve and the short-run aggregate supply (AS) curve in the appropriate directions. PRICE LEVEL 240 200 160 120 80 40 0 100 200 300 400 OUTPUT (Billions of dollars) AS AD 500 600 In the long run, due to the stock market boom, the price level output, and the unemployment rate the natural rate. 0 2 0 2 , the quantity of output the natural level of
The following graph shows a hypothetical economy in long-run equilibrium at an expected price level of 120 and a natural output level of $300 billion. Suppose a stock market boom increases household wealth and causes consumers to spend more. Using the graph, shift the short-run aggregate supply (AS) curve or the aggregate demand (AD) curve to show the short-run impact of the stock market boom. PRICE LEVEL 240 200 160 120 80 40 0 0 100 400 OUTPUT(Bilions of dollars) 200 300 AS AD 500 600 AD o AS (? the price In the short run, the increase in consumption spending associated with the stock market expansion causes the price level to level people expected and the quantity of output to the natural level of output. The stock market boom will cause the unemployment rate to the natural rate of unemployment in the short run. Again, the following graph shows a hypothetical economy experiencing long-run equilibrium at the expected price level of 120 and natural output level of $300 billion, prior to the increase in consumption spending associated with the stock market expansion. Along the transition from the short run to the long run, price-level expectations will curve will shift to the and the
Transcribed Image Text:The following graph shows a hypothetical economy in long-run equilibrium at an expected price level of 120 and a natural output level of $300 billion. Suppose a stock market boom increases household wealth and causes consumers to spend more. Using the graph, shift the short-run aggregate supply (AS) curve or the aggregate demand (AD) curve to show the short-run impact of the stock market boom. PRICE LEVEL 240 200 160 120 80 40 0 0 100 400 OUTPUT(Bilions of dollars) 200 300 AS AD 500 600 AD o AS (? the price In the short run, the increase in consumption spending associated with the stock market expansion causes the price level to level people expected and the quantity of output to the natural level of output. The stock market boom will cause the unemployment rate to the natural rate of unemployment in the short run. Again, the following graph shows a hypothetical economy experiencing long-run equilibrium at the expected price level of 120 and natural output level of $300 billion, prior to the increase in consumption spending associated with the stock market expansion. Along the transition from the short run to the long run, price-level expectations will curve will shift to the and the
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