Using the three-point curved line drawing tool, show how the following event will impact the economy's short-run aggregate supply (AS) curve. Properly label this curve. 12- 11- Event: High taxes and excessive regulation cause firms to reduce the quantity of their physical capital. 10- 9- Note: Carefully follow the instructions above and only draw the required object. 8- 5- 4- 3- 2- 1- 9. 10 Aggregate output (income), Y Price level, P

Using the three-point curved line drawing tool, show how the following event will impact the economy's short-run aggregate supply (AS) curve. Properly label this curve. 12- 11- Event: High taxes and excessive regulation cause firms to reduce the quantity of their physical capital. 10- 9- Note: Carefully follow the instructions above and only draw the required object. 8- 5- 4- 3- 2- 1- 9. 10 Aggregate output (income), Y Price level, P

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter25: The Keynesian Perspective

Section: Chapter Questions

Problem 20CTQ: Suppose the economy is operating at potential GDP when It experiences an increase in export demand....

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(a) Suppose the price level in an economy rises while the money wage rate remains constant. What happens to the quantity of real GDP supplied. How will this affect the aggregate supply or aggregate demand curve? What if the potential GDP increases? Which aggregate curve is affected and how? (b) Planned Real GDP Consumption Investment $1,000 $100 1,900 100 2,800 100 3,700 100 $1,000 2,000 3,000 4,000 Government Purchases Net Exports $150 -$50 150 -50 150 -50 150 -50 From the table data provided, answer the following questions. The numbers in the table are in billions of dollars. Show all calculations. a. What is the equilibrium level of real GDP? b. What is the Marginal Propensity to Consume? c. What is the multiplier value in this economy? d. If potential GDP is $4,000 billion, is the economy at full employment? If not, what is the condition of the economy? e. If the economy is not at full employment, by how much should government spending increase so that the economy can move to the…
$ Which of the following would cause the Aggregate Supply curve to move from AS to AS2 in the graph below? fs Price Level 150 140 130 120 110 100 90 80 70 60 % 5 0 16 5 O A general increase in energy and labor cost for businesses. O A federal government increase in spending. t 6 10 15 Real GDP ($ billion) -AS-AD-AS2 2 fa lyi & 7 7 J * 20 8 8 num lk ( 25 (1¹) 9
5 How do planned inventories enter firms' calculations in arriving at a short-run equilibrium output ?
ament Score: 37.6% Resources Lx Give Up? Hint on 4 of 15 <. Suppose that the dynamic aggregate demand curve in Swaziland is determined by the equation M+ D= 6%. Using this information, draw Swaziland's dynamic aggregate demand curve on the graph. 13 Aggregate demand 12 11 10 8. 9. 4. 1. -3 -2 -1 0. 2. 3. Real GDP growth rate 5. 6. 10 4. 4. 7. 14 Inflation rate
(a) Suppose the price level in an economy rises while the money wage rate remains constant. What happens to the quantity of real GDP supplied. How will this affect the aggregate supply or aggregate demand curve? What if the potential GDP increases? Which aggregate curve is affected and how? (b) Real GDP Consumption Planned Investment Government Purchases Net Exports $1,000 $1,000 $100 $150 -$50 2,000 1,900 100 150 -50 3,000 2,800 100 150 -50 4,000 3,700 100 150 -50 From the table data provided, answer the following questions. The numbers in the table are in billions of dollars. Show all calculations. a. What is the equilibrium level of real GDP? b. What is the Marginal Propensity to Consume? c. What is the multiplier value in this economy? d. If potential GDP is $4,000 billion, is the economy at full employment? If not, what is the condition of the economy? e. If the economy is not at full employment, by how much should government spending…
2.) Using the point drawing tool, identify the new equilibrium point and label it 'B'. Note: Carefully follow the instructions above and only draw the required objects. b. The worldwide glut gets worse, and the result is a falling price level (deflation) in the United States. Figure B on the right shows an economy in an initial short-run equilibrium at point A. 1.) Using the three-point curved line drawing tool, illustrate the impact of the decrease in input prices due to the worldwide glut. Properly label this curve. 2.) Using the point drawing tool, identify the new equilibrium point and label it 'B'. Note: Carefully follow the instructions above and only draw the required objects. Price level, P ASO A Aggregate output (income), Y ADO K7
1 As more of the nation s systems of river locks 1. As more of the nation’s systems of river locks become deficient, what is happening to the pace at which the U.S. production possibilities curve shifts outward over time? 2. How are deficiencies in the U.S. river system affecting the extent to which the U.S. long-run aggregate supply come shifts rightward each year? 1 As more of the nation s systems of river locks
Which of the following would cause the Aggregate Supply curve to move from AS to AS2 in the graph below? Price Level 150 140 130 120 110 100 90 80 70 60 0 5 10 15 Real GDP ($ billion) AS -AD-AS2 O A federal government increase in spending. O A general increase in energy and labor cost for businesses. O An increase in productivity. O A general decrease in labor cost for businesses. 20 25
6. Why the aggregate supply curve slopes upward in the short run In the short run, the quantity of output that firms supply can deviate from the natural level of output if the actual price level in the economy deviates from the expected price level. Several theories explain how this might happen. For example, the misperceptions theory asserts that changes in the price level can temporarily mislead firms about what is happening to their output prices. Consider a soybean farmer who expects a price level of 100 in the coming year. If the actual price level turns out to be 90, soybean prices will and if the farmer mistakenly assumes that the price of soybeans declined relative to other prices of goods and services, she will respond by the quantity of soybeans supplied. If other producers in this economy mistake changes in the price level for changes in their relative prices, the unexpected decrease in the price level causes the quantity of output supplied to the natural level of output in…
6. Why the aggregate supply curve slopes upward in the short run In the short run, the quantity of output that firms supply can deviate from the natural level of output if the actual price level in the economy deviates from the expected price level. Several theories explain how this might happen. For example, the misperceptions theory asserts that changes in the price level can temporarily mislead firms about what is happening to their output prices. Consider a soybean farmer who expects a price level of 100 in the coming year. If the actual price level turns out to be 90, soybean prices will and if the farmer mistakenly assumes that the price of soybeans declined relative to other prices of goods and services, she will respond by the quantity of soybeans supplied. If other producers in this economy mistake changes in the price level for changes in their relative prices, the unexpected decrease in the price level causes the quantity of output supplied to the natural level of output in…
Suppose real GDP is $3,500, what of these is occuring? $4,000 Supply 45-degree line Planned aggregate spending, AEplanned (billions of dollars) AEPlanned 3,000 Demand 2,000 1,400 1,000 800 $500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 Real GDP (billions of dollars) O Supply shortage. Exces supply. O Equilibrium. Excess demand.
Refer to the information provided in Figure 11.3 below to answer the questions that follow. AS, ASo Aaangate output Figure 11.3 Refer to Figure 11.3. A decrease in aggregate supply is represented by Select one: 3. a movement from Point B to Point A alcong AS, Ob.amovement from Point B to Point Calong AS Oca shift from AS to AS . Odashift from AS, to AS.