Principles of Macroeconomics 2e
2nd Edition
ISBN: 9781947172388
Author: Steven A. Greenlaw; David Shapiro
Publisher: OpenStax
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Textbook Question
Chapter 11, Problem 44CTQ
If new government regulations require firms to use a cleaner technology that is also less efficient than what they previously used, what would the effect be on output, the price level, and employment using the AD/AS diagram?
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If new government regulations require firms to use a cleaner technology that is also less efficient than what they previously used, what would the effect be on output, the price level, and employment using the AD/ AS diagram?
Some politicians have suggested tying the minimum wage to the consumer price index (CPI). Using the AD/AS diagram, what effects would this policy most likely have on output, the price level, and employment?
If workers look around and see prices rising more quickly than they had planned for, what is the likely effect on their real wage? And what does that imply for income and employment? Again, use the AD/AS model's chart or equations.
Chapter 11 Solutions
Principles of Macroeconomics 2e
Ch. 11 - Describe the mechanism by which supply creates its...Ch. 11 - Describe the mechanism by which demand creates its...Ch. 11 - The short run aggregate supply curve was...Ch. 11 - In the AD/AS model, what prevents the economy from...Ch. 11 - Suppose the U.S. Congress passes significant...Ch. 11 - Suppose concerns about the size of the federal...Ch. 11 - How would a dramatic increase in the value of the...Ch. 11 - Suppose Mexico, one of our largest trading...Ch. 11 - A policymaker claims that tax cuts led the economy...Ch. 11 - Many financial analysts and economists eagerly...
Ch. 11 - What impact would a decrease in the size of the...Ch. 11 - Suppose, after five years of sluggish growth, the...Ch. 11 - Suppose the Federal Reserve begins to Increase the...Ch. 11 - If the economy is operating in the neoclassical...Ch. 11 - If the economy is operating In the Keynesian zone...Ch. 11 - What is says law?Ch. 11 - What is Keynes; law?Ch. 11 - Do neoclassical economists believe in Keynes law...Ch. 11 - Does Says law apply more accurately in the long...Ch. 11 - What is on the horizontal axis of the AD/AS...Ch. 11 - What is the economic reason why the SRAS curve...Ch. 11 - What are the components of the aggregate demand...Ch. 11 - What are the economic reasons why the AD curve...Ch. 11 - Briefly explain the reason for the near-horizontal...Ch. 11 - Briefly explain the reason for the near-vertical...Ch. 11 - What is potential GDP?Ch. 11 - Name some factors that could cause the SRAS curve...Ch. 11 - Will the shift of SRAS to the right tend to make...Ch. 11 - What is stagflation?Ch. 11 - Name some factors that could cause AD to shift,...Ch. 11 - Would a shift of AD to the right tend to make the...Ch. 11 - How is long-term growth illustrated in an AD/AS...Ch. 11 - How is recession illustrated in an AD/AS model?Ch. 11 - How is cyclical unemployment illustrated in an...Ch. 11 - How is the natural rate of unemployment...Ch. 11 - How is pressure for inflationary price increases...Ch. 11 - What are some of the ways in which exports and...Ch. 11 - What is the Keynesian zone of the SRAS curve? How...Ch. 11 - What is the neoclassical zone of the SRAS curve?...Ch. 11 - What is the intermediate zone of the SRAS curve?...Ch. 11 - Why would an economist choose either the...Ch. 11 - On a microeconomic demand curve, a decrease in...Ch. 11 - Economists expect that as the labor market...Ch. 11 - If new government regulations require firms to use...Ch. 11 - During spring 2016 the Midwestern United States,...Ch. 11 - Hydraulic fracturing (tracking) has the potential...Ch. 11 - Some politicians have suggested tying the minimum...Ch. 11 - If households decide to save a larger portion of...Ch. 11 - If firms become more optimistic about the future...Ch. 11 - If Congress cuts taxes at the same time that...Ch. 11 - Suppose the level of structural unemployment...Ch. 11 - If foreign wealth-holders decide that the United...Ch. 11 - The AD/AS model is static. It shows a snapshot of...Ch. 11 - Explain why the short-run aggregate supply curve...Ch. 11 - Explain why the short-run aggregate supply curve...Ch. 11 - Why might it be important for policymakers to know...Ch. 11 - In your view, is the economy currently operating...Ch. 11 - Are Says law and Keynes law necessarily mutually...Ch. 11 - Review the problem in the Work It Out titled...Ch. 11 - The imaginary country of Harris Island has the...Ch. 11 - Table 24.4 describes Santhers economy. Plot the...
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Similar questions
- Explain how might positive thinking help an economy expand? Demonstrate your explanation using the AD / AS graph as part of your answer.arrow_forwardA policymaker claims that tax cuts led the economy out of a recession. Can we use the AD/AS diagram to show this?arrow_forwardWhat is the condition of the U.S. economy now (phase of business cycle, GDP growth rate, unemployment rate, inflation rate)? What actions have the U.S. government taken? What are the impacts of these actions in an AD-AS framework?arrow_forward
- Beginning in March 2013, federal government spending was resstrained due to the sequester (feel free to Google details). Moreover, then President Obama’s budget proposals called for cuts in various types of government spending over the next ten years. Use the AD-AS model (along with a labor market graph) to show and explain how this will affect Y, N, W/P, and P over time. As an aside, recent news reports have suggested that the possibility of a renewed use of the sequester is part of the current political maneuvering over the federal budget for the fiscal year that starts October 1st.arrow_forwardUsing an AD-AS diagram, explain what happens if personal income taxes increase.arrow_forwardPolicymakers who can influence AD cannot offset the adverse effects of a recession due to a fall in AS’. Do you agree with this statement? Explain the answer in words and using an AD-AS diagramarrow_forward
- Suppose firms are optimistic about the outlook of the economy and they decide to increase investment. Also suppose that, simultaneously, there is a reduction in business taxes. Use the AD-AS graph to show what happens to the price level and output as a result.arrow_forwardGraphically derive and explain the AD curve.arrow_forwardUse the AD/AS model to explain the likely short run impacts on US GDP and the aggregate price level. What do you anticipate will happen to US consumption expenditure and US employment?arrow_forward
- What impact would a decrease in the size of the labor force have on GDP and the price level according to the AD/AS model?arrow_forwardDuring the spring of 2016 the Midwestern U.S., which has a large agricultural base, experiences above-average rainfall. Draw the AD/AS diagram, what is the effect on output, the price level, and employment?arrow_forwardUsing an AD/AS diagram (starting from long-run/full employment equilibrium), graphically show and verbally describe how each of the following events would affect the U.S. economy's equilibrium real GDP and price level. a. Discovery and implementation of new technology b. Mexico's economic growth increases faster than ours c. There is a general increase in the price of raw materials e. The cost of labor (wages) rises g. The price of oil is expected to fall d. The number of workers in the labor force decreases due to pandemic retirements/death f. A new Congress decreases government spending h. Consumer confidence fallsarrow_forward
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