3. Given an economy at its potential level of GDP, the impact of a positive AS shock on real GDP will be reversed in the long run with a shift to the in (a) left; AD b) left; AS icd: c) right; AS d) right; AD e) right; potential level of GDP

Assume an economy operates in the intermediaterange of its aggregate supply curve. State thedirection of shift for the aggregate demandor aggregate supply curve for each of thefollowing changes in conditions. What is theeffect on the price level? On real GDP? Onemployment?a. The price of crude oil rises significantly.b. Spending on national defense doubles.c. The costs of imported goods increase.d. An improvement in technology raises laborproductivity.

1. Which of the following could cause a shift from AD to AD₁, ceteris paribus? PRICE LEVEL a a Figure 10.1 REAL OUTPUT ($ billions per year) B) an increase in exports A) a decrease in investment AD OC) an increase in consumer confidence OD) an increase in consumption AS 4

The following questions refer to this table: a.At each level of output, calculate saving. At each level of out-put, calculate unplanned investment (inventory change).What is likely to happen to aggregate output if the economyproduces at each of the levels indicated? What is the equilib-rium level of output?b.Over each range of income (2,000 to 2,500, 2,500 to 3,000, andso on), calculate the marginal propensity to consume. Calculatethe marginal propensity to save. What is the multiplier?c.By assuming there is no change in the level of the MPC andthe MPS and planned investment jumps by 200 and is sus-tained at that higher level, recompute the table. What is thenew equilibrium level of Y? Is this consistent with what youcompute using the multiplier?

The graph below shows an economy operating at equilibrium in both the short run and long run at its full employment level of output. a. Show what happens when this economy moves from its full-employment equilibrium into a period of stagflation. Use the graph to draw either a new AD curve or new AS curve to demonstrate stagflation in this economy Instructions: Use the tool provided "New Curve to plot the appropriate line. After placing the curve, click on "Select and choose whether to label the curve "AD" or "AS" from the dropdown menu. Aggregate Demand and Aggregate Supply Price Level LRAS Tools New Curve 0

1. If firms only know and care about their own production levels and are not aware about the economy's total output (Y) and AD, how do they know when to increase or decrease their production until Y = AD?

Use the following diagram to answer this question Price level or GDP deflator Ro 41- SRAS₂ ----- AD₂ SRAS, SRAS, -11110 AD₁ AD₁ Output or RGDP Suppose the short-run macroeconomic equilibrium is at point A. In the short run, an open market sale would move the equilibrium to: O A. point E OB. point C O C. point H O D. point B 10

Assume an economy operates in the intermediate range of its aggregate supplycurve. For each of the following changes in conditions, state the direction of theeffect on: aggregate demand, aggregate supply, price level, real GDP.(a) A decrease in government expenditure in infrastructure(b) A severe recession occurs in a country which has been a major importer of thenation’s exports.(c) The federal government increases business taxes   with diagram

In the AD/AS model, what prevents the economy from achieving equilibrium at potential output?

Suppose Mexico, one of our largest trading partners and purchaser of a large quantity of our exports, goes into a recession. Use the AD/AS model to determine the likely impact on our equilibrium GDP and price level.