Economics:
10th Edition
ISBN: 9781285859460
Author: BOYES, William
Publisher: Cengage Learning
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Question
Chapter 8, Problem 8E
To determine
(a)
To write:
The impact of a fall in aggregate
To determine
(b)
To write:
If there is any difference between short run and long run.
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Students have asked these similar questions
Explain why the following statements are false.a. “The aggregate-demand curve slopes downwardbecause it is the horizontal sum of the demandcurves for individual goods.”b. “The long-run aggregate-supply curve is verticalbecause economic forces do not affect long-runaggregate supply.”
There are several determinants of aggregate supply that can cause the aggregate supply curve to shift.
a. Describe those determinants and give an example of a change in each.
b. Draw and label an aggregate supply diagram that illustrates the effect of the change in each determinant.
Draw an aggregate demand and supply diagram for Japan. In the diagram, show how each of the following affects aggregate demand and supply.
a. The U.S. gross domestic product falls.
b. The level of prices in Korea falls.
c. Labor receives a large wage increase.
d. Economists predict higher prices next year.
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Similar questions
- The following event has occurred in the history of the United States: S. businesses expect future profits to fall. Explain for event whether it changes short-run aggregate supply, long-run aggregate supply, aggregate demand, or some combination of them.arrow_forwardAssume that the United States is currently in a recession. a. Draw a correctly labelled graph of aggregate demand and aggregate supply showing each of the following in the United States: i. Output level ii. Price level Aarrow_forwardStarting with a short run and long run equilibrium, assume a war breaks out, then," a.government spending increases b.household consumption increases c.long run aggregate supply shifts rightward d.short run aggregate supply shifts rightward.arrow_forward
- Consider each of the following events and then figure out how each of these events will affect the aggregate demand curve. a. An increase in the price level will cause a b. An increase in government purchases will cause a c. An increase in state income taxes will cause a d. An increase in interest rates will cause a e. A faster income growth in other countries will cause a the aggregate demand curve. the aggregate demand curve. the aggregate demand curve. the aggregate demand curve. the U.S. aggregate demand curve.arrow_forwardc. If aggregate demand shifts right, what is equilibrium output? d. if aggregate demand shifts left, what is equilibrium output?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_forward
- The experience of the 1970s taught economists that changes in: a. both aggregate demand and aggregate supply are important in understanding changes in the economy in the short run. b. just supply and demand will affect the long run. c. aggregate demand can affect the economy in the long run. d. aggregate supply can affect the economy in the long run.arrow_forwardIf the price level rises, what happens to aggregate supply? Aggregate supply _______. A. doesn't change, but the quantity of real GDP supplied increases B. decreases C. increases D. doesn't change, but the quantity of real GDP supplied decreasesarrow_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. A widespread fear of depression on the part of consumers.b. A $2 increase in the excise tax on a pack of cigarettes.c. A reduction in interest rates at each price level.d. A major increase in Federal spending for health care.e. The expectation of rapid inflation.f. The complete disintegration of OPEC, causing oil prices to fall by one-half.g. A 10 percent reduction in personal income tax rates.h. A sizable increase in labor productivity (with no change in nominal wages).i. A 12 percent increase in nominal wages (with no change in productivity).j. Depreciation in the international value of the dollar.arrow_forward
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