Question HelpWhat is the effect of a rise in the price of oil on the U.S. economy? How does the economy return to its long-runequilibrium? What is stagflation?Price level (GDP price index, 2012=D100)145-The graph shows the U.S. economy at a full-employment equilibrium.Draw a curve that shows the effect of a rise in the price of oil. Label it 1.Draw a point at the new macroeconomic equilibrium.Label it E1.Potential GDP135-ASODraw a curve that shows the economy returning to a full-employment equilibrium with no action by the central bank or the125-government. Label it 2.Draw a point at the full-employment equilibrium.Label it E2.115-Stagflation105-O A. occurs when aggregate demand decreases by more than aggregate supply increases95-O B. is another name for an inflationary gapADOO C. has not been experienced in the United States since the Great Depression85-18.019.020.021.022.0O D. is a combination of recession and inflation.Real GDP (trillions of 2012 dollars)>>> Draw only the objects specified in the question.Click the graph, choose a tool in the palette and follow the instructions to create your graph.MacBook AirDIIF12吕口888F10F9F7F8F5F4F3escF2F1&#$%!8412PERYQtabSDFGcaps lockVBMCshiftcommandcontreloptioncommand.の

The AD-AS model analyses the macroeconomic phenomenon of the economy. The intersection point of the…

What is the effect of a rise in the price of oil on the U.S. economy? How does the economy return to its long-run equilibrium? What is stagflation? Price level (GDP price index, 2012 100) 145 The graph shows the U.S. economy at a full-employment equilibrium. Draw a curve that shows the effect of a rise in the price of ol. Label it 1. Draw a point at the new macroeconomic equilibrium. Label it E Draw a curve that shows the economy returning to a full-employment equilibrium with no action by the central bank or the government. Label it 2. Draw a point at the full-employment equilibrium. Label it Ez 135- Potential GDP AS 125- 115 Stagflation 105 OA. occurs when aggregate demand decreases by more than aggregate supply increases B. is another name for an inflationary gap AD C. has not been experienced in the United States since the Great Depression 85 160 20.0 Real GDP (trillons of 2012 dollars) 19.0 210 22.0 D. is a combination of recession and inflation. >>> Draw only the objects specified in the question. of

What is the effect of a rise in the price of oil on the U.S. economy? How does the economy return to its long-run equilibrium? What is stagflation? Price level (GDP price index, 2012 100) 145 The graph shows the U.S. economy at a full-employment equilibrium. Draw a curve that shows the effect of a rise in the price of ol. Label it 1. Draw a point at the new macroeconomic equilibrium. Label it E Draw a curve that shows the economy returning to a full-employment equilibrium with no action by the central bank or the government. Label it 2. Draw a point at the full-employment equilibrium. Label it Ez 135- Potential GDP AS 125- 115 Stagflation 105 OA. occurs when aggregate demand decreases by more than aggregate supply increases B. is another name for an inflationary gap AD C. has not been experienced in the United States since the Great Depression 85 160 20.0 Real GDP (trillons of 2012 dollars) 19.0 210 22.0 D. is a combination of recession and inflation. >>> Draw only the objects specified in the question. of

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter24: The Aggregate Demand/aggregate Supply Model

Section: Chapter Questions

Problem 28RQ: Will the shift of SRAS to the right tend to make the equilibrium quantity and price level higher or...

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Will the shift of SRAS to the right tend to make the equilibrium quantity and price level higher or lower? What about a shift of SRAS to the left?
Price level (GDP price Index 2012-100) Pocential AS 130 GDP 120 110 100 90 AD 19.0 195 20.0 20.5 21.0 21.5 Real GDP (trillons of 2012 dollars) In the figure above, the economy is at an equilibrium with real GDP of $20 trillion and a price level of 110. As the economy moves toward its ultimate equilibrium, the curve shifts because O a. aggregate supply; leftward; the money wage rate rises O b. aggregate supply; rightward; the money wage rate falls O c. aggregate demand; leftward; the money wage rate rises d. potential GDP; leftward; the money wage rate falls O e. aggregate demand; rightward; the money wage rate falls
Suppose the economy of Hawkland is initially at full employment. Currently real GDP is $20 trillion, theprice level is 120, the money wage is $36/hour, the full employment quantity of labor is 300 billionhours per year, and the current unemployment rate is 6%. Draw a fully labeled graph depicting the aggregate goods and services market in Hawkland.Be sure to label all axes and include numerical values for variables on the axes where relevant. Providea brief explanation to the side and show any necessary calculations. Label any relevant curves with azero (0, for example: AD0) and use a zero in a circle to clearly label the initial equilibrium
Suppose that a decrease in the demand for goods and services pushes the economy into arecession. In your own words, explain what happens to the price level and real GDP? Explainhow the economy will eventually get back to the potential output?
Suppose the money market for some hypothetical economy is given by the following graph, which plots the money demand and money supply curves. Assume the central bank in this economy (the Fed) fixes the quantity of money supplied. Suppose the price level decreases from 150 to 125. Shift the appropriate curve on the graph to show the impact of a decrease in the overall price level on the market for money. Money Supply 15 12 4 Money Demand 3 5 10 15 20 MONEY (Billions of dollars) INTEREST RATE (Percent) 18 0 0 25 30 Money Demand Money Supply (?) Following the price level decrease, the quantity of money demanded at the initial interest rate of 9% will be supplied by the Fed at this interest rate. As a result, individuals will attempt to bonds and other interest-bearing assets, and bond issuers will realize that they restored in the money market at an interest rate of than the quantity of money their money holdings. In order to do so, they will interest rates until equilibrium is
Consider the following table and identify equilibrium GDP. If the potential GDP is at 12.0, what can you conclude about price levels and the unemployment rate? Current Price Level Real GDP-quantity demanded per trillion Real GDP-quantity supplied per trillion 6.0 10.0 8.0 120 115 110 100 11.0 13.0 8.0 6.0 5.0 The economy has high unemployment but experiences stable price levels because the economy operates below the potential GDP. O The economy has stable price levels and low unemployment because it is operating above the potential GDP. O The economy is experiencing rising price levels and has a low unemployment rate because it is operating above the potential GDP.
What is the new GDP in the short-run as a result of this shift? What is the new price level in the short-run as a result of this shift? What is the price level in the new long-run equilibrium as a result of this shift? What is GDP in the new long-run equilibrium as a result of the shift?
What is the new short-run price level? What is the new short-run GDP? What is the new Long-run price level? What is the new long-run GDP?
PRICE LEVEL 240 200 160 120 80 40 0 0 3 SRAS[120] 12 6 9 REAL GDP (Trillions of dollars) 15 18 SRAS[120] O Interpret the change you drew on the previous graph by filling in the blanks in the following paragraph: The lower-than-expected price level causes firms to earn they their production level. At the same time, the real value of wages and other resource prices is expected when they signed long-term contracts. As a result, the economy as a whole produces at a level unemployment rate is than its natural rate. profit than they expected on each unit of output they produce, and, therefore, than workers and firms its potential output, and the Now, suppose prices remain lower than expected. As a result, in the next round of labor negotiations, unions accept lower wages for their members. The following graph shows the potential output for this economy as well as the same initial short-run aggregate supply curve as in the first graph. Shift one or both of these lines to illustrate how the…
2. The theory of liquidity preference and the downward-slopingaggregate demand curve Suppose the money market for some hypothetical economy is given by the following graph, which plots the money demand and money supply curves. Assume the central bank in this economy (the Fed) fixes the quantity of money supplied. Suppose the price level increases from 90 to 105. Shift the appropriate curve on the graph to show the impact of an increase in the overall price level on the market for money. INTEREST RATE (Percent) 18 15 12 8 3 0 0 20 Money Supply Money Demand 40 60 80 MONEY (Billions of dollars) 100 120 Money Demand Money Supply Following the price level increase, the quantity of money demanded at the initial interest rate of 9% will be supplied by the Fed at this interest rate. As a result, individuals will attempt to bonds and other interest-bearing assets, and bond issuers will realize that they restored in the money market at an interest rate of % than the quantity of money their money…
Answer the question based on the following price and output data over a five-year period for an economy that produces only one good. Assume that year 2 is the base year. Year Units of Output Price Per Unit $2 ITT 1 8. 2 10 3 3 15 4 4 18 20 6 a) If year 2 is the base year, then the percentage increase in real GDP from year 2 to year 4 is: percent. b) If prices increased, we need to adjust nominal GDP values to give us a measure of GDP for various years in constant-dollar terms. We refer to that adjustment as: ( Inflating ; Deflating; Compounding GDP ; Indexing ) GDP. <-- Circle a correct answer! c) If the Consumer Price Index rises from 300 to 333 in a particular year, the rate of inflation in that year is: percent. d) Amy sells $100 worth of cotton to Bob. Bob turns the cotton into cloth, which he sells to Camille for $300. Camille uses the cloth to make prom dresses that she sells to Donita for $700. Donita sells the dresses for $1,200 to kids attending the prom. The total…
Price Level LAS SAS, SAS, LAD, SAS, AD AD₁ Real Output Refer to the graph. Suppose the economy is at SAS2 and AD3. What is a possible way the economy can return to potential output? What dynamic price level feedback effect could prevent the return to potential output? How would the dynamic price level feedback effect show up in the graph? A decrease in wages in the economy; a decrease in wages would further decrease AD; a shift in AD3 to the left A decrease in material costs in the economy; a decrease in material costs would decrease AD; a shift in AD3 to the right A decrease in wages in the economy; a decrease in wages would further decrease AD; a shift in AD from AD2 to AD1 O A decrease in asset prices in the economy; a decrease in asset prices would further decrease AD; a shift in AD from AD2 to AD3