ofThe economy of Langoria is currently in a state of long-run equilibrium in which the economy is producing at its Natural Real GDP. The level of RealGDP is currently 3 trillion dollars, and the price level is 130.100PRICE LEVEL1701601501401301201101002Changes in a Self-Regulating EconomyADAD₂BRAS123LRAS23 Homework: Classical Macroeconomics and the Self-Regulating Economy (Ch 09)XSRASLRASPRICI1301201101000234REAL GDP (Trillions of dollars).Suppose there is a sudden increase in government purchases that causes a shift in aggregate demand from AD, to AD₂. As a classical economistfrom Langoria, you explain that the shift in aggregate demand createsYou also explain thatwill be affected in the short run.You note that such a gap leads to an unemployment rate that istoAs wages change, theexplain that in the long run,the natural unemployment rate. This means that wages are certainuntil Real GDP equals Natural Real GDP. Finally, youcurve shifts to thewill be affected.

A self-regulating economy is a concept of economics that explains that, under certain situations,…

Answered: economy GDP is currently 3 trillion…

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Chapter10: Aggregate Demand And Supply

Section10.A: The Self Correcting Aggregate Demand And Supply Model

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Real GDP Real GDPDemanded, Price Level Supplied,Billions (Price Index) Billions$100 300 $450200 250 400300 200 300400 150 200500 100 100 Use these sets of data to graph the aggregate demandand aggregate supply curves. What is the equilibriumprice level and the equilibrium level of real output inthis hypothetical economy? Is the equilibrium real output also necessarily the full-employment real output?Explain.b. Why will a price level of 150 not be an equilibriumprice level in this economy? Why not 250?c. Suppose that buyers desire to purchase $200 billion ofextra real output at each price level. Sketch in the newaggregate demand curve as AD1. What factors mightcause this change in aggregate demand? What is thenew equilibrium price level and level of real output?
Suppose the economy is self-regulating, the price level is 132, the quantity demanded of RealGDP is 4 trillion, the quantity supplied of Real GDP in the short run is 3.9 trillion, and thequantity supplied of Real GDP in the long run is 4.3 trillion. Is the economy in short-runequilibrium? Will the price level in long-run equilibrium be greater than, less than, or equal to132? Show the relevant graph and explain your answers.
Describe how different parts of the economy may have experienced shifts and changes in supply and demand. Provide at least 4 examples.
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R The model of aggregate demand/aggregate supply... O Identifies the equilibrium GDP and price level as well as the gap between the equilibrium GDP and the potential GDP Identifies the potential GDP and price level as well as the gap between the price level and the inflation. O Identifies the equilibrium GDP the economy will reach in the long A run O Identifies the equilibrium quantity and price for consumer goods 10 % 5 T 6 O Y Com liji fa 887 & 7 7 U 8 4 f10 num lk. 8 ( 5 9 開

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/118790/quizzes/952344/take ASU My ASU Р P1 PO P PO P1 OB ASU CANVAS O C A LRAS YO Y1 B LRAS YO Y1 SAS AD Real GDP SAS AD' SAS AD Real GDP P PO P1 P P1 PO C LRAS Y1 YO D AD' LRAS SAS Y1 YO SAS AD Real GDP SAS AD Suppose the economy begins in long-run equilibrium. Which of the graphs best describes the long-run result of a decrease in the money supply? Real GDP P P1 PO PO P1 E ……….. LRAS www. F YO YO LRAS SAS' AD' SAS AD SAS AD Real GDP AD' SAS' Real GDP
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economy GDP is currently 3 trillion dollars, and the price level is 130. PRICE LEVEL 170 110 Changes in a Self-Regulating Economy AD AD₂ SRAS