Suppose the following: (1) the wage rises, (2) the interest rate rises, (3) any change in AD is twice as large as any change in SRAS. Based on this information, in the short run Real GDP will __________ and the price level will __________. a.rise; fall b.fall; rise c.fall; fall d.rise;rise
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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?Assume an economy operates in the intermediate range of its aggregate supply curve. State the direction of shift for the aggregate demand curve or aggregate supply curve for each of the following changes in conditions. What is the effect on the price level? On real GDP? On employment? a. The price of crude oil rises significantly (300%, say) raising the price of energy generally. b. Spending on national defense doubles. c. Investment spending falls as firms expect slower sales growth. d. An improvement in technology raises labor productivity. e. The United States raises exports of new passenger aircraft to China.Suppose the economy experiences a "supply shock" due to a fall in oil prices. As a result, the economy experiences a/an ___________in the price level and a/an _______in the level of output(GDP) Group of answer choices Decrease; decrease Increase; increase Decrease; increase Increase; decreas
- Consider the following AD-AS graph of country H. Price level (P) LL OF; E OF; A O B; C O B; A OB; E F LRAS E A D B SRAS3 AD₁ SRAS₁ SRAS2 AD2 Real GDP (Y) Country H is currently at point A. Consumer confidence increases and households increase consumption, then in the short run country H will move to point and in the long to pointAssume an economy operates in the intermediate range of its AS curve (upward sloping AS curve). State the direction of shift in the AD or the AS curve for each of the following changes and the impact of that change on the price level, on GDP, and on employment. a) a rise in the price of crude oil b) an increase in the spending on national defense c) an increase in the cost of imported goods d) an improvement in labor productivityOnly a change in the price level can cause shifts in both the aggregate expenditure line and the aggregate demand curve. a. True b. False
- a. What is the equilibrium price level? $ b. What curve (AD or AS) would have shifted if a new equilibrium were to occur at an output level of 600 and price level of $600? AD would have shifted to the right. AD would have shifted to the left. AS would have shifted to the left. AS would have shifted to the right. c. What curve would have shifted if a new equilibrium were to occur at an output level of 600 and a price level of $200? AD would have shifted to the right. AD would have shifted to the left. AS would have shifted to the left. O AS would have shifted to the right.Which of the following would not increase Aggregate Demand? a. Increased Consumption b. Increased Government Expenditure c. Increased Investment Expenditure d. Decrease in the overall price levelThe following graph shows an aggregate demand (AD) curve and a short-run aggregate supply (SRAS) curve for an economy. Suppose the economy is initially in a short-run equilibrium at PE, and Real GDP is 25trillion. At some point, the economy experiences a decrease in wage rates. Adjust the following graph to show the effect of a decrease in wage rates on the economy. Price Level 0 5 10 I | 1 15 20 25 30 35 Real GDP (Trillions Dollars) SRAS AD 40 45 50 AD SRAS
- The following graph shows an economy's short-run aggregate supply curve (SRAS), current equilibrium aggregate price level (P₁), and real GDP ( Q₁). The economy currently has Natural Real GDP (QN) of $8 trillion. Use this information to place the orange long-run aggregate supply curve (LRAS, square symbols) in the correct position on the graph. PRICE LEVEL 10 P₁ 8 4 2 0 0 A 기 4 6 8 10 REAL GDP (Trillions of dollars) 2 The equilibrium A₁, shifting SRAS SRAS 12 14 own on the graph, reveals that re GDP (Q₁) is LRAS ? Natural Re GDP. As a result, wages will over time,Which of the following is not a reason for the downward slope of the aggregate demand curve? As the price level decreases, the quantity demanded of real GDP increases. O As the price level decreases, American products are more attractive than imports, so their aggregate quantity increases. O As the price level decreases, the purchasing power of dollar decreases, so aggregate demand increases. O As the price level decreases, interest rates decrease, so consumption increases.Which of the following statements about Aggregate Demand is true... a) It is negatively related to the price level because a decrease in the price level has a negative effect on the demand for output b) It is negatively related to the price level because a decrease in the price level has a positive effect on the demand for output c) It is positively related to the price level because a decrease in the price level has a negative effect on the demand for output d) It is positively related to the price level because a decrease in the price level has a positive effect on output demand
