Exploring Macroeconomics
8th Edition
ISBN: 9781544337722
Author: Robert L. Sexton
Publisher: SAGE Publications, Inc
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Question
Chapter 14, Problem 7P
To determine
(a)
To illustrate:
The inflationary gap on the provideddiagram.
To determine
(b)
To explain:
The final long-run equilibrium with the help of a diagram.
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Students have asked these similar questions
The 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.
Are there any “good” supply shocks? Explain
A central bank forecasts a rise in raw material costs. The government plans to increase spending
on health and education.
The initial equilibrium point is shown by X on the aggregate demand, AD, and aggregate supply,
AS, diagram.
What would be the new equilibrium point in the short run if the forecasts prove to be accurate and
the government plans are implemented?
AS,
AS2
general
price
level
AS
B
A
AD, AD AD,
real output
C.
Chapter 14 Solutions
Exploring Macroeconomics
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- In the Keynesian framework, which of the following events might cause a recession/inflation. Explain using the aggregate demand/aggregate supply. I only need the type of examples that go with the question though (Examples are crucial please!)  d. The interest rate rises e. The good imported from a major trading partner becomes much less expensive arrow_forwardEconomics Assess the following statements whether are true or false? Justify your answer making reference to the objectives of the policy maker and please answer the question in 5 lines a. Economic policy should aim to limit firm-level volatility ( b. Economic policy should aim to limit macro-level volatilityarrow_forwardMatch the policies below to whether they would be said by a Keynesian or Neoclassical economist: A. Policy should concentrate on minimizing cyclical unemployment B. Since the long-run aggregate supply curve is fixed, increasing aggregate demand too much will just lead to inflation 1. Neoclassical 2. Keynesianarrow_forward
- In the Keynesian framework, which of the following events might cause recession/inflation. Explain using the Aggregate Demand/Aggregate Supply with examples. (Examples are crucial please!) d. The interest rates rises e. The good imported from a major trading partner becomes much less expensivearrow_forwardUse the figure to answer the following questions. Explain your reasoning and show your answers on the graph. Copy the image to MSWord, and draw the appropriate lines using the 'design' tab and then select the shapes you want to include, lines, arrows, etc. Save your answer and upload your file. a. At which equilibrium point the economy has an inflationary gap, and what is its value in percentage points? b. At what point the economy is at full employment, and what is its value in trillions of dollars? c. Draw an AD showing a recessionary gap of 0.5 trillion dollars. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.arrow_forwardWhat effects would each of the following have on aggregate demand or aggregate supply? In each case use a diagram to show the expected effects on the equilibrium price level and the level of real output. Assume all other things remain constant. a. The expectation of rapid inflation b. A 10 percent reduction in personal income tax rates c. A sizable increase in labor productivity (with no change in nominal wages) d. A 12 percent increase in nominal wages (with no change in productivity) e. Depreciation in the international value of the dollar.arrow_forward
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