The graph shows the aggregate demand and long-run aggregate supply (LRAS) curves for a given economy. Show the effect of a real shock that results in potential real GDP changing to 6% by shifting the relevant curve or curves. Inflation rate (%) 4 LRAS 12 11 10 9 8 6 3 Aggregate Demand 2 1 0 -4 -2 ° 2 4 6 8 10 Real GDP growth rate (%) 12 14 16 Which three factors could have caused this change in potential real GDP? Assume this is a typical economy relying on inputs such as coal and oil. Factors Answer Bank riots and political instability good farming weather oil price increase coal price decrease increased consumer confidence an improvement in technology an increase in exports a major bird flu pandemic

The graph shows the aggregate demand and long-run aggregate supply (LRAS) curves for a given economy. Show the effect of a real shock that results in potential real GDP changing to 6% by shifting the relevant curve or curves. Inflation rate (%) 4 LRAS 12 11 10 9 8 6 3 Aggregate Demand 2 1 0 -4 -2 ° 2 4 6 8 10 Real GDP growth rate (%) 12 14 16 Which three factors could have caused this change in potential real GDP? Assume this is a typical economy relying on inputs such as coal and oil. Factors Answer Bank riots and political instability good farming weather oil price increase coal price decrease increased consumer confidence an improvement in technology an increase in exports a major bird flu pandemic

Principles of Economics, 7th Edition (MindTap Course List)

7th Edition

ISBN:9781285165875

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter33: Aggregate Demand And Aggregate Supply

Section: Chapter Questions

Problem 5PA

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Specific subject - Macroeconomic Analyse the case of a negative supply shock caused by an increase in oil prices and compare with the shock caused by the Covid pandemic. What would be the similarities and differences between the two shocks? What would be the effect of an expansionary economic policy (increase in aggregate demand)? Graph What measures or government intervention would be most appropriate to deal with both types of shocks? Graph Compare the adjustment in both cases with and without government intervention. Graph
Price level AD AD Real GDP FIGURE 23-4 Refer to Figure 23-4. Suppose the Canadian economy is initially in equilibrium at point A. An unexpected shock then shifts both the AD and the AS curves as shown and results in a new equilibrium represented by point B. Which of the following events could cause such a shock? Select one: O A. a decrease in the world price of oil O B. an increase in the net tax rate O C. an increase in factor prices O D. a decrease in firms' desired investment experiditures a decrease in labour productivity
1. How many recessions did the US economy experience between 1929 and 2020? What were the four longest recessions between 1929 and 2019, not including the COVID-19 recession? What were the three deepest recessions between 1929 and 2019? That is, during which three recessions was the decline in real GDP biggest from peak to through? How long did the COVID-19 recession last?
Illustrate and interpretthe short-run and longrun effects of temporary and permanentsupply shocks
2. An introduction to the AD-AS model The aggregate demand and aggregate supply model is a useful simplification of the macroeconomy used to explain short-run fluctuations in economic activity around its long-run trend. The vertical axis of a diagram of the aggregate demand and aggregate supply curves measures which of the following? An economy’s price level The amount of a particular representative good produced in the economy The price of a particular representative good produced in the economy Which of the following are reasons that the short-run aggregate supply curve slopes upward? Check all that apply. As the price level rises, firms expand their production because they can sell their output for more money. As the price level rises, firms find it more profitable to hire workers at any given wage. As the price level rises, firms decrease their investment because it is more expensive to purchase capital.
Without looking at Table 19.7, return to Figure 19.10. If we define a recession as a significant decline in national output, can you identify any post-1960 recessions in addition to the 20082009 recession? (This requires a judgment call.)
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The economy has shifted and the quantity of the real GDP supplied has increased. What has potentially happened to aggregate price levels? Potentially the price levels have increased to a higher aggregate price level and if the wages are sticky, businesses have hired more employees as labor has become cheaper. O Potentially the price levels have decreased to a lower aggregate price level and if the wages are sticky, businesses have hired more employees as labor has become cheaper. Potentially the price levels have increased to a higher aggregate price level and if the wages are sticky, businesses have fired some employees as labor has become too expensive.
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