MACROECONOMICS FOR TODAY
10th Edition
ISBN: 9781337613057
Author: Tucker
Publisher: CENGAGE L
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Question
Chapter 10, Problem 18SQ
To determine
The indication of the shift in the aggregate demand curve.
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Suppose an Increase in aggregate demand shifts the economy from equilibrium to P₁ and Y₁.
Price Level
LRAS
P₁
#X
Pt
AD
Yo Y₁
Real GDP
a. Which of the following events would likely cause the Increase in aggregate demand?
Exports decrease due to reduced foreign incomes.
Personal consumption falls as workers become concerned with future employment prospects.
Gross Investment increases as capital units become fully utilized.
AS
b. An increase in aggregate demand is of policy concern due to the Increase in the
unemployment rate.
price level.
O productivity of workers
c. Which policy action should the federal government enact?
O Increase government spending on Infrastructure
increase personal income tax rates
O decrease real Interest rates
d. The size of the policy acuon should result in an intersection of AD and AS that is
greater than output Y
O less than output Y
Ooqual to output Y
Which does not increase aggregate demand?Select one:
a.lower income taxes.
b.lower value of Canadian dollar.
c.consumers become more optimistic.
d.lower interest rates.
e.technological innovations.
The aggregate supply curve shows the relationship between real GDP and the average price level.
a. True.
b. False.
Chapter 10 Solutions
MACROECONOMICS FOR TODAY
Ch. 10.7 - Prob. 1YTECh. 10.A - Prob. 1SQPCh. 10.A - Prob. 2SQPCh. 10.A - Prob. 3SQPCh. 10.A - Prob. 4SQPCh. 10.A - Prob. 5SQPCh. 10.A - Prob. 6SQPCh. 10.A - Prob. 1SQCh. 10.A - Prob. 2SQCh. 10.A - Prob. 3SQ
Ch. 10.A - Prob. 4SQCh. 10.A - Prob. 5SQCh. 10.A - Prob. 6SQCh. 10.A - Prob. 7SQCh. 10.A - Prob. 8SQCh. 10.A - Prob. 9SQCh. 10.A - Prob. 10SQCh. 10.A - Prob. 11SQCh. 10.A - Prob. 12SQCh. 10.A - Prob. 13SQCh. 10.A - Prob. 14SQCh. 10.A - Prob. 15SQCh. 10.A - Prob. 16SQCh. 10.A - Prob. 17SQCh. 10.A - Prob. 18SQCh. 10.A - Prob. 19SQCh. 10.A - Prob. 20SQCh. 10 - Prob. 1SQPCh. 10 - Prob. 2SQPCh. 10 - Prob. 3SQPCh. 10 - Prob. 4SQPCh. 10 - Prob. 5SQPCh. 10 - Prob. 6SQPCh. 10 - Prob. 7SQPCh. 10 - Prob. 8SQPCh. 10 - Prob. 9SQPCh. 10 - Prob. 10SQPCh. 10 - Prob. 11SQPCh. 10 - Prob. 1SQCh. 10 - Prob. 2SQCh. 10 - Prob. 3SQCh. 10 - Prob. 4SQCh. 10 - Prob. 5SQCh. 10 - Prob. 6SQCh. 10 - Prob. 7SQCh. 10 - Prob. 8SQCh. 10 - Prob. 9SQCh. 10 - Prob. 10SQCh. 10 - Prob. 11SQCh. 10 - Prob. 12SQCh. 10 - Prob. 13SQCh. 10 - Prob. 14SQCh. 10 - Prob. 15SQCh. 10 - Prob. 16SQCh. 10 - Prob. 17SQCh. 10 - Prob. 18SQCh. 10 - Prob. 19SQCh. 10 - Prob. 20SQ
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Similar questions
- Which of the following would shift aggregate demand to the right? 1) The value of the dollar increases. 2) There is a decline in consumer confidence. 3) Stock market values increase by 20%. 4) College graduates are having a difficult time finding jobs. 5) A fall in the price level increases the value of real wealth.arrow_forwardUsing aggregate demand and aggregate supply, graph the effects on the price level and GDP of each of the following. Draw a large graph and label all axes, initial and final equilibrium points, direction of shift if any, all curves and lines, equilibrium values on the x- and y-axes. State the conclusion in words. a. A cut in income taxes b. An increase in military spending c. A drop in export demand by foreign purchasers d. An increase in imports e. A decline in business investment spendingarrow_forwardWhich items describe long-run aggregate supply (LRAS), and which ones describe short-run aggregate supply (SRAS)? Long-Run Aggregate Supply The unemployment rate, u, may be above or below the natural rate. Unemployment is at the natural rate, u*. All prices can change. Short-Run Aggregate Supply + Only some prices can change. The economy's output may be above or below the full-employment level, Y*. The economy's output, Y, is at the full- employment level.arrow_forward
- At a price level of 105, firms are unable to _______. A. meet the demand for their output, so they increase production and raise prices B. sell their output, so they cut production and aggregate supply decreases C. meet the demand for their output, so they increase production and aggregate supply increases D. sell their output, so they cut production and lower pricesarrow_forwardThe downward-sloping aggregate demand curve indicates that, ceteris paribus: Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. there is an inverse relationship between demand and the average level of prices. a b a greater quantity of real GDP will be demanded at higher price levels than at lower price levels. C d a decrease in the price level leads to an increase in the quantity demanded of real GDP. inflation and output are directly related.arrow_forwardAggregate demand will shift to the right, if: Selected Answer: B. the aggregate price level increases. Answers: A. there is an increase in taxes. B. the aggregate price level increases. C. there is a decrease in money supply. D. the government purchases increase.arrow_forward
- Unemployment would decrease and prices would increase if a. aggregate supply shifted left. b. aggregate demand shifted right. c. aggregate supply shifted right. d. aggregate demand shifted left.arrow_forwardWhich of the following would shift the long-run aggregate supply curve to the right?a. a decrease in the rate of inflationb. an increase in the growth rate of spendingc. a severe drought that decreases crop production and as a result raises pricesd. the invention of a new computer chip that makes assembly production twice as fastarrow_forwardIf the economy is operating way below capacity, an increase in aggregate demand causes a big change in the and small change in Select one: a. aggregate demand; aggregate supply b. price level; output C. output; price level d. aggregate supply; aggregate demandarrow_forward
- Suppose that the economy of Monaco is represented by the aggregate demand (AD), short-run aggregate supply (SRAS), and long-run aggregate supply (LRAS) curves in the accompanying graph. a. Based on the graph, Monaco is experiencing a deflationary gap. currently at long-run equilibrium. experiencing an inflationary gap. b. Which of the following policies eliminate this phenomenon? A birth control subsidy An increase government purchases of goods and services An increase in taxes An increase in government transfers A cut in taxes c Suppose that the government implements the policy proposed in part b. Shift the aggregate demand curve on the graph accordingly. Aggregate price level LRAS 7 6 X 5 4 3 AD 2 3 10 9 8 2 1 0 0 1 4 5 6 Real GDP 7 8 SRAS 9 10arrow_forwardAll other things being equal, an decrease in the oil price will cause: a. the AD to shift up to the right. b. the AS curve to shift down to the right. C. a down movement along the AS curve. d. the AD curve to shift down to the left.arrow_forwardThe aggregate supply shifts to the right if: A. supplies of resources increase. B. investment increases. C. wage rates increase. D. consumption increases.arrow_forward
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