Tips The following graph shows an economy's short run aggregate supply curve (SRAS), current equilibrium aggregate price level (P, ), and real GDP ({:Q,). The economy currently has Natural Real GDP (Q) of $8 billion Use this information to place the orange long-run aggregate supply curve (LRAS, square symbols) in the correct position on the graph. (?) The equilibrium A,, shown on the graph, reveals that real GDP(Q,) is Natural Real GDP. As a result, wages will over time, shiftina SRAS PRICE LEVEL The following graph shows an economy's short-run aggmonte supply curve (SRAS), numer Q.). The economy currently has Natural Real GDP (Q) of $8 bilion. Use this information to place the orange long-rum aggregate supply curve (LRAS, square symbcs) a ggregate price level (P), and real GDP ( correct position on the graph 0 2 REAL GCP (Tons of dolla BRAS Tre equ ibrium As, shown on the greph, revesis that real GDP (1) s shine SRAS LRAS (?) Natural Real GDP, As a result, wages will

Tips The following graph shows an economy's short run aggregate supply curve (SRAS), current equilibrium aggregate price level (P, ), and real GDP ({:Q,). The economy currently has Natural Real GDP (Q) of $8 billion Use this information to place the orange long-run aggregate supply curve (LRAS, square symbols) in the correct position on the graph. (?) The equilibrium A,, shown on the graph, reveals that real GDP(Q,) is Natural Real GDP. As a result, wages will over time, shiftina SRAS PRICE LEVEL The following graph shows an economy's short-run aggmonte supply curve (SRAS), numer Q.). The economy currently has Natural Real GDP (Q) of $8 bilion. Use this information to place the orange long-rum aggregate supply curve (LRAS, square symbcs) a ggregate price level (P), and real GDP ( correct position on the graph 0 2 REAL GCP (Tons of dolla BRAS Tre equ ibrium As, shown on the greph, revesis that real GDP (1) s shine SRAS LRAS (?) Natural Real GDP, As a result, wages will

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The following are variables that may cause shifting of aggregate demand (AD) curve. Discuss the effect of increasing these variables to the aggregate demand. Use graphical approach to demonstrate the effect of increasing of each variable and explain why the AD curve shifted. a) Government expenditure (domestic)
Suppose you are given the following information about an economy: Short run Aggregate Supply: SRAS = Y = 5000r+ 14,400 Long run Aggregate Supply: Aggregate Demand: Investment Spending: Consumption Spending: Government Spending: Net Exports (eX – iM): LRAS = Y* = 25,000 AD = Y=C+I+G+NX_ I = 4000 – 250r C = 1000 +0.75(Y – T) G = 2000 NX = 500 Taxes – Transfers: T = 2400 Monetary Policy: Money Demand: Money Market equilibrium: Fisher equation: where i is the nominal interest rate (i.e. when the interest rate is 7%, it means i= 7) r = 2 n м 3 20,000- 2000i M$ = MD i = r+T e. Find the short run equilibrium level of real GDP (Y), and inflation rate (t), in the short run. What is the output gap in the economy? Is it an expansionary or recessionary gap?
Suppose the economy of Apple Republic is represented by the following equations: Z = C +|+ G C = 500 + .5YD T= 600 |= 300 YD = Y - T G = 2000 (Enter number only into the boxes) a. Given the above variables, calculate the equilibrium level of output (Y) disposable income (Yp) and consumption (C) Hint: First specify (using the above numbers) the demand equation (Z) for this economy. Second, using the equilibrium condition, equate this expression with Y. Once you have done this, solve for the equilibrium level of output (Y). Third, once you get Y, you can T from Y to get Yp. Finally, once you get Yp, you substitute it into the consumption equation to get consumption (C). b. Now, assume that government spending decreases from 2000 to 1900. What is the new equilibrium level of output (Y) ? What is the multiplier for this economy c. Now, assume that G is still at 2000, but taxes increase from 600 to 700. What is the new equilibrium level of output (Y) ? What is the multiplier for this…
Analysts say that the increase in gasoline prices comes a drop in SUV sales and trade-in values at dealerships.The U.S. Department of energy said that during the past week, U.S. gasoline topped $3 a gallon - the highest level since October 2008. According to Alec Gutierrez,lead analyst for vehicle evaluation at Kelley Blue Book, SUV sales have decreased about 1 percent since the last major gasoline price hike in spring 2008. He doesn't believe that SUV sales will decrease significantly unless prices reach $3.50 to $4 per gallon. if a gasoline price hike of 5 percent caused the SUV sales drop described, what is the cross-price elasticity of demand between gasoline and SUVs?
Economic On April 27, 2023, the U.S. Bureau of Economic Analysis (BEA) released the data on GDP growth for the US economy for the first quarter of 2023 and revealed that the economy grew sluggishly by only 1.1 percent. Based on this report, suppose the U.S. consumers and businesses start to become pessimistic about the direction of the economy and eventually cut consumer and business spending, analyze using the IS-LM and AD-AS frameworks the short and long-run effects of such a shock on prices, output, and real interest rate.
Assume that the long-run aggregate supply curve is vertical at Y = 3.000 while the short-run aggregate supply curve is horizontal at P=1.0, . The aggregate demand curve is Y = 2(M / P) and M = 1,500. Suppose the aggregate demand function shifts to Y = (1.5)(M / P) . What are the short- run values of P and Y? Show the change in short and long- run equilibrium graphically . Describe the short- run and long- run effects of the change in demand .
List 4 factors that will cause the IS curve to shift to the right.
Market equilibrium and disequilibrium The following graph shows the monthly demand and supply curves in the market for keyboards. Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. 05010015020025030035040045050080726456484032241680PRICE (Dollars per keyboard)QUANTITY (Keyboards)Demand Supply Graph Input Tool Market for Keyboards Price (Dollars per keyboard) Quantity Demanded (Keyboards) Quantity Supplied (Keyboards) The equilibrium price in this market is per keyboard, and the equilibrium quantity is keyboards bought and sold per month. Complete the following table by indicating at each price whether there is a shortage or surplus in the market, the amount of that shortage or surplus, and…
Connect assignment O es Use the following information to draw aggregate demand (AD) and aggregate supply (AS) curves on the following graph. Output Demanded (Aggregate Demand) Output Supplied (Aggregate Demand) Price Level 600 100 Price Level (average price) Instructions: Use the tools provided 'AD' and 'AS' to plot the aggregate demand (AD) and aggregate supply (AS) curves. Plot only the endpoints of each line (plot 2 points for each line-4 points total). Both curves are assumed to be straight lines. 900 800 700 600 500 400 300 200 100 0 0 $700 100 Aggregate Supply and Demand 200 $800 100 900 900 900 900 90 900 900 700 Real Output (quantity per year) Instructions: Enter your response as a whole number. a. What is the equilibrium price level? $ Tools AD D AS e b. What curve (AD or AS) would have shifted if a new equilibrium were to occur at an output level of 600 and a price level of $600? O AS would have shifted to the right. O AS would have shifted to the left. O AD would have…
Assume an economy operates in the intermediate range of its aggregate supplycurve. For each of the following changes in conditions, state the direction of theeffect on: aggregate demand, aggregate supply, price level, real GDP.(a) A decrease in government expenditure in infrastructure(b) A severe recession occurs in a country which has been a major importer of thenation’s exports.(c) The federal government increases business taxes with diagram
PRICE LEVEL 160 150 140 130 120 110 100 90 80 0 с 1 d X a 2 3 4 5 REAL GDP (Trillions of dollars) 6 + 7 b H 8 (?) Identify which curve on the previous graph corresponds to each description in the following table. If the curve described does not appear on the graph, choose Not Shown. Description Short-run aggregate supply (SRAS) when there is a recessionary gap Aggregate demand (AD) Short-run aggregate supply (SRAS) when there is an inflationary gap Short-run aggregate supply (SRAS) when the economy is in long-run equilibrium Long-run aggregate supply (LRAS) a O b O O O с O O O O d O O Not Shown
The U.S. economy is in both short-run and long-run equilibrium, as shown in the graph below. Assume the federal government decides to decrease personal income taxes. a. Show the effect on the short-run equilibrium as a result of the decrease in taxes. Using the graph, draw either the new AD curve or new AS curve resulting from this change. Instructions: Use the tool provided "New Curve" to plot the appropriate line. After placing the curve, click on "Select" and choose whether to label the curve "AD1" or "AS1" from the dropdown menu.