The following table shows the real output demanded and supplied at various price levels in a hypothetical economy. Real Output Demanded (Billions of dollars) 40 60 100 140 280 Price Level (Index number) 160 120 80 60 40 Real Output Supplied (Billions of dollars) (Billions of dollars) 320 280 220 140 40 On the following graph, use the blue points (circle symbols) to plot the aggregate demand (Initial AD) curve for the economy. Then use the orange points (square symbols) to plot the short-run aggregate supply (SRAS) curve for the economy.
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- The table below shows aggregate demand and aggregate supply schedules in a hypothetical economy, Acadia. Aggregate Demand and Aggregate Supply Schedules for Acadia Real GDP Price Level (2012 = 100) 140 130 120 110 100 (ADO) 190 210 230 250 270 (AD1) (ASO) (2012 $ billions) 240 260 280 300 320 270 260 230 180 110 (AS1) 310 300 280 250 190 a. Draw a graph showing Acadia's ADo, ADI, ASo, and AS1. Plot only the endpoints of the two aggregate demand curves and all five points for each of the two aggregate supply curves. b. If initially ADo and ASo are the relevant schedules, what are Acadia's equilibrium price level and real output? What happens if the price level is 140? 110? c. If aggregate demand shifts from ADo to AD1 while aggregate supply remains at ASo what are Acadia's new equilibrium price level and real output? Describe this change in aggregate demand. d. If aggregate supply shifts from ASo to AS1 while aggregate demand returns to ADo, what are Acadia's new equilibrium price level…The table below shows aggregate demand and aggregate supply schedules in a hypothetical economy, Acadia. Aggregate Demand and Aggregate Supply Schedules for Acadia Real GDP PADO) (AD1) (ASo) (AS1) Price Level (2012 = 100) (2012 $ billions) 140 150 200 230 280 130 170 220 220 270 120 190 240 190 240 110 210 260 160 210 100 230 280 120 170 a. Draw a graph showing Acadia's ADO, AD1, ASo and AS1. Using the tools given below plot only the endpoints of the demand curves ADo and AD1. Plot all 5 points for each supply curve, ASo and AS1. ces Aggregate Demand and Supply for a hypothetical economy, Acadia 150 Tools 140 ADO AD1 130 120 ASo AS1 110 100 90 100 150 200 250 300 Real GDP (2012 $ billion) Price Level (GDP deflator 2012 = 100)The following graph shows the aggregate demand (AD) curve in a hypothetical economy. At point A, the price level is 140, and the quantity of output demanded is $300 billion. Moving down along the aggregate demand curve from point A to point B, the price level falls to 120, and the quantity of output demanded rises to $500 billion. 170 100 180 140 130 120 110 AD 100 00 100 200 300 400 B00 700 OUTPUT (Billians of dollars) As the price level falls, the cost of borrowing money will , causing the quantity of output demanded to Additionally, as the price level falls, the impact on the domestic interest rate will cause the real value of the dollar to in foreign exchange markets. The number of domestic products purchased by foreigners (exports) will therefore and the number of foreign products purchased by domestic consumers and firms (imports) will Net exports will therefore causing the quantity of domestic output demanded to
- The following graph shows a decrease in aggregate demand (AD) in a hypothetical country. Specifically, aggregate demand shifts to the left from AD1AD1 to AD2AD2, causing the quantity of output demanded to fall at all price levels. For example, at a price level of 140, output is now $200 billion, where previously it was $300 billion. The following table lists several determinants of aggregate demand. Complete the table by indicating the change in each determinant necessary to decrease aggregate demand. Change needed to decrease AD Wealth (increase/ decrease) Taxes (increase/ decrease) Expected rate of return on investment (increase/ decrease) Incomes in other countries (increase/ decrease)4. Equilibrium The following table shows the real output demanded and supplied at various price levels in a hypothetical economy. Real Output Demanded (Billions of dollars) 10 20 30 50 80 Price Level (Index number) 160 120 80 40 20 Real Output Supplied (Billions of dollars) 85 80 70 50 20 On the following graph, use the blue points (circle symbol) to plot the aggregate demand (Initial AD) curve for the economy. Then use the orange points (square symbol) to plot the aggregate supply (AS) curve for the economy.The following graph shows the aggregate demand (AD) curve in a hypothetical economy. At point A, the price level is 140, and the quantity of output demanded is $300 billion. Moving down along the aggregate demand curve from point A to point B, the price level falls to 120, and the quantity of output demanded rises to $500 billion. 170 160 150 A 140 130 B 120 110 AD 100 90 100 200 300 400 500 600 700 800 OUTPUT (Billions of dollars) As the price level falls, the cost of borrowing money will causing the quantity of output demanded to This phenomenon is known as the effect. Additionally, as the price level falls, the impact on the domestic interest rate will cause the real value of the dollar to in foreign exchange markets. The number of domestic products purchased by foreigners (exports) will therefore and the number of foreign products purchased by domestic consumers and firms (imports) will Net exports will therefore causing the quantity of domestic output demanded to . This phenomenon…
- The following graph shows an increase in aggregate demand (AD) in a hypothetical country. Specifically, aggregate demand shifts to the right from AD1 to AD2, causing the quantity of output demanded to rise at all price levels. For example, at a price level of 140, output is now $400 billion, where previously it was $300 billion. 170 160 150 140 - 130 AD2 120 110 AD, 100 90 100 200 300 400 500 600 700 800 OUTPUT (Billions of dollars) The following table lists several determinants of aggregate demand. Complete the table by indicating the change in each determinant necessary to increase aggregate demand. Change Needed to Increase AD Wealth Taxes Interest rates The value of the domestic currency relative to the foreign currency PRICE LEVELSuppose 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 isThe following graph shows an increase in short-run aggregate supply (SRAS) in a hypothetical economy. Specifically, short-run aggregate supply shifts to the right from SRAS₁ to SRAS2, causing the quantity of output supplied at a price level of 125 to rise from $250 billion to $350 billion. Review the graph and then complete the table that follows. PRICE LEVEL 200 175 150 125 100 75 50 25 0 0 50 SRAS SRAS₂ 100 150 200 250 300 350 400 REAL GDP (Billions of dollars) ? The following table lists several determinants of short-run aggregate supply. Complete the table by indicating the change needed in each determinant to increase short-run aggregate supply. Determinant Change Needed to Increase SRAS Input Prices increase or decrease Burdensome Regulations increase or decrease Technology decline or improvement
- Note: Line segments will automatically connect the points. PRICE LEVEL (Billions of dollars) 200 160 120 0 80 160 240 REAL GDP (Index numbers) The equilibrium price level is 320 400 Initial AD The change in government spending the multiplier effect. SRAS New AD ✓, and the equilibrium level of real output is Suppose that the government spending increases by $16 billion and the expenditure multiplier in this economy is 5. On the previous graph, use the purple points (diamond symbols) to illustrate the effect of the increase in government spending on the aggregate demand (New AD) curve. the equilibrium level of real output by . The price level increaseSuppose that the aggregate demand and aggregate supply schedules for a hypothetical economy are as shown in the following table. Amount of Real GDP Demanded, Amount of Real GDP Supplied, Billions Price Level1 Billions (Price Index) $ 100 $ 200 $ 300 $ 400 $ 500 300 $ 450 250 400 200 300 150 200 100 100 a. Use the data above to graph the aggregate demand and aggregate supply curves. Instructions: (1) Use the tools provided 'AD' and 'AS' to draw the aggregate demand and aggregate supply curves (plot 5 points total for each curve). To earn full credit for this graph, you must plot all required points for each curve. (2) Use the tool provided 'Eq' to indicate the equilibrium price level and the equilibrium level of real output. 350 Tools 300 AD AS 250 200 Eq 150 100 50 100 200 300 400 500 600 700 Real domestic output (billions of dollars) Price levelOn the following graph, use the purple Mine (diamond symbol) plot this economy's long-run aggregate supply (LRAS) curve. Then use the orange ne segments (square symbol) to plat the economy's shart-run aggregate supply (AS) curve at each of the following price levels: 100, 105, 110, 115, and 120, PRICE LEVEL 116 110 105 100 80 75 0 + 10 20 30 40 90 70 OUTPUT (ons of dollars) 85 120 AS LRAS The short-run quantity of output supplied by firms will fall short of the natural level of output when the actual price level level that people expected. the price