Exploring Macroeconomics
8th Edition
ISBN: 9781544337722
Author: Robert L. Sexton
Publisher: SAGE Publications, Inc
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Question
Chapter 19, Problem 12P
To determine
(a)
To show:
Whether the given situation can affect the long-run and/or short run
To determine
(b)
To show:
Whether the given situation can affect the long-run and/or short run aggregate supply and employment in an economy.
To determine
(c)
To show:
Whether the given situation can affect the long-run and/or short run aggregate supply and employment in an economy.
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The Australia Federal Government established a AUD 2 billion grant to help sectors affected by the bushfires to get the support they needed to recover. Use the Aggregate Demand and Aggregate Supply Model below to answer the questions that follow.
i. Using the Aggregate Demand and Aggregate Supply Model did the 2019/20 cause economic expansion or economic contraction in Australia. Name at least three sectors that were affected by the bushfires and examine the impact of the bush fires to the economy of Australia.
ANSWER:
ii. Employ the Aggregate Demand and Aggregate Supply Model to explain the benefits of the Australia government AUD2 billion grant to the economy.
ANSWER:
Which 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.
Please explain why the long-run aggregate supply curve is vertical. What variable causes the short-run aggregate supply curve to shift? Please identify whether an increase in that variable will cause the short-run aggregate supply curve to shift to the right or to the left. What is the relationship among the AD, SRAS, and LRAS curves when the economy is in macroeconomic equilibrium?
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