Macroeconomics (Fourth Edition)
4th Edition
ISBN: 9780393603767
Author: Charles I. Jones
Publisher: W. W. Norton & Company
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Question
Chapter 13, Problem 3RQ
To determine
Describe some example of shocks that shift AD and AS curves.
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What are some examples of shocks that shift the AD curve? What about theAS curve?
In the AD/AS model, why does any given AD shock result in a different price and output effects on short-run macroeconomic equilibrium?
What causes the economy to be in disequilibrium for a while?
How does an economy adjust back to equilibrium?
What does it mean to graph the effects of an un anticipated increase in the price level on the AD-AS (aggregate demand/supply) graph?
Chapter 13 Solutions
Macroeconomics (Fourth Edition)
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Similar questions
- When does a Short-Run Aggregate Supply curve shift upwards and why?arrow_forwardThe imaginary country of Harris Island has the aggregate supply and aggregate demand curves as Table 24.3 shows. a. Identify the (i) equilibrium basing from the AD/AS diagram attached. b. Would you expect unemployment in this economy to be relatively high or low? c. Would you expect concern about inflation in this economy to be relatively high or low? d. Imagine that consumers begin to lose confidence about the state of the economy, and so AD becomes lower by 275 at every price level. Identify the new aggregate equilibrium. e. How will the shift in AD affect the original output, price level, and employment?arrow_forwardExplain with the aid of a diagram An increase in the price of oil is an example of a negative supply shock. Use the AD-AS model graph to explain the effect of a negative supply shock on the price levels and output levels in the economy.arrow_forward
- What is the neoclassical zone of the SRAS curve? How much is the output level likely to change in the neoclassical zone?arrow_forwardName some factors that could cause AD to shift, and say weather they would shift AD to the right or to the left.arrow_forwardWhat relationship does the short-run aggregate supply curve represent?arrow_forward
- An increase in the price of oil is an example of a negative supply shock. Use the AD-AS model graph to explain the effect of a negative supply shock on the price levels and output levels in the economy.arrow_forwardExplain why the short-run aggregate supply curve might be fairly flat in the Keynesian zone of the SRAS curve. How might we tell if we are in the Keynesian zone of the AS?arrow_forwardReview the problem shown in the Work It Out titled "Interpreting the AD/AS Model." Like the information provided in that feature, Table 24.2 shows information on aggregate supply, aggregate demand, and the price level for the imaginary country of Xurbia. Price Level AD AS 110 700 600 120 690 640 130 680 680 140 670 720 150 660 740 160 650 760 170 640 770 Table24.2 Price Level: AD/AS Plot the AD/AS diagram from the data shown. Identify the equilibrium. Imagine that, as a result of a government tax cut, aggregate demand becomes higher by 50 at every price level. Identify the new equilibrium. How will the new equilibrium alter output? How will it alter the price level? What do you think will happen to employment?arrow_forward
- What is the Keynesian zone of the SRAS curve? How much is the price level likely to change in the Keynesian zone?arrow_forwardWhat efect would an aggregate demand shock have on the economy?arrow_forwardWhy does the aggregate demand curve slope downward and what causes the AD curve to shift?arrow_forward
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