MACROECONOMICS FOR TODAY
10th Edition
ISBN: 9781337613057
Author: Tucker
Publisher: CENGAGE L
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Question
Chapter 10.A, Problem 5SQ
To determine
The reason behind the upward sloping
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Aggregate demand and aggregate supply, based on a problem from “Principles of Economics” by N. Gregory Mankiw
a) List the components of country’s GDP in an open economy. For each component, provide an example of an event that would cause a shift of the aggregate demand curve to the right.b) What will be the effect of such events on the level of prices and the real outcome in the short run? Provide a graph.c) What will be the effect of such events on the level of prices and the real outcome in the longrun? Update your graph
Which of the following are assumed to remain unchanged along a given short-run aggregate supply curve? Check all that apply.
A. The position of the aggregate demand curve
B. The price level
C. Real GDP
D. Input prices
Which of the following is correct?
a.
The long-run and short-run supply curves are both consistent with the idea that nominal variables affect real variables.
b.
The long-run, but not the short-run, aggregate supply curve is consistent with the idea that nominal variables do not affect real variables.
c.
Neither the long-run nor the short-run aggregate supply curve is consistent with the idea that nominal variables affect real variables.
d.
The short-run, but not the long-run, aggregate supply curve is consistent with the idea that nominal variables do not affect real variables.
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
- In the following table, determine how each event affects the position of the long-run aggregate supply (LRAS) curve. Direction of LRAS Curve Shift The government allows more immigration of working-age adults who find work. No shift v This economy's primary source of foreign oil decides to cease exports for political reasons. Right An investment tax credit increases the rate at which firms acquire machinery and Left equipment. Grade It Now Save & Continue Continue without saving rti...docx ere to search hp %23arrow_forwardThe Aggregate Supply (AS) curve slopes upward to reflect the profit motive of businesses. So, why are there two versions of the AS curve( i.e. short run and long- run). Discussarrow_forwardWhich of the following would cause the aggregate supply curve to increase... A) Energy prices such as gas and electricity have increased rapidly throughout the country. B) The government has reduced its spending by more than 10% over the last 2 years C) Consumers are more confident and spending more than before. D) Throughout the economy, workers are using better equipment and output per hour is rising.arrow_forward
- For the Canadian economy, what is the least important of the three reasons for the downward slope of the aggregate-demand curve? a. wealth effect b. interest-rate effect c. exchange-rate effect d. real-wage effectarrow_forward5) In the aggregate demand relation, a reduction in the price level causes output to increase because of its effect on: A) firms' markup over labour costs. B) the nominal wage. C) the interest rate. D) the expected price level. E) government spending.arrow_forwardDraw lines for the long-run aggregate supply curve. Explain its shape and what can cause it to move in a few sentences. b. Now add in the short run aggregate supply curve. What explains its shape and what can cause it to move? c. On a new diagram, draw the aggregate demand curve. Explain its shape and what can cause it to shift. d. Why do we have short- and long-run supply curves but only one (ie not short or long-run) demand curve?arrow_forward
- First the economy is on the point C. Explain the result of an increase in the money supply in the long run. Explain the role of factor productivity on Short Run Aggregate Supply (SRAS).arrow_forwardWhich of the following would lead to a shift of the long-run aggregate supply? a. increased capital stock (more factories, technology, etc) b. increased labor force & employment c. more natural resources such as petroleum, natural gas, etc. d. all of the above would shift the LRAS to the Right.arrow_forwardAssume the economy of Chile is in a long-run equilibrium with full employment. In the short run,nominal wages are fixed.1. Draw a correctly labeled graph of short-run aggregate supply, long-run aggregate supply,and aggregate demand. Show each of the following.a. Equilibrium output, labeled Y1b. Equilibrium price level, labeled PL1 2. Assume that there is an increase in exports from Chile. On your graph in question 1,show the effect of higher exports on the equilibrium in the short run, labeling the newequilibrium output and price level Y2 and PL2, respectively.3. Based on your answer in part (b), what is the impact of higher exports on real wages inthe short run? Explain.4. As a result of the increase in exports, export-oriented industries in Chile increaseexpenditures on new container ships and equipment.a. What component of aggregate demand will change?b. What is the impact on the long-run aggregate supply? Explain.arrow_forward
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