Use the AD/AS model below to answer the following questions. In each case, assume the economy starts in long- and short-run equilibrium. Price Level (base = 100) 100.0 The Macroeconomy in long- and short-run equilibrium LRAS Real GDP AD₁ SRAS₁ a. Suppose there is a decrease in consumer confidence. Instuctions: Drag the appropriate line in the correct direction to show the short-run effect on the AD/AS model. In the short run, this will (Click to select) b. In the long-run, if the government takes no action to help the economy, (Click to select) (Click to select and output (Click to select V c. Suppose, instead, the government decides to take action to help the economy, using monetary policy. You can recommend (Click to select) This policy will (Click to select) (Click to select) Rectangula and (Click to select) The price level

Use the AD/AS model below to answer the following questions. In each case, assume the economy starts in long- and short-run equilibrium. Price Level (base = 100) 100.0 The Macroeconomy in long- and short-run equilibrium LRAS Real GDP AD₁ SRAS₁ a. Suppose there is a decrease in consumer confidence. Instuctions: Drag the appropriate line in the correct direction to show the short-run effect on the AD/AS model. In the short run, this will (Click to select) b. In the long-run, if the government takes no action to help the economy, (Click to select) (Click to select and output (Click to select V c. Suppose, instead, the government decides to take action to help the economy, using monetary policy. You can recommend (Click to select) This policy will (Click to select) (Click to select) Rectangula and (Click to select) The price level

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 37RQ: What are some of the ways in which exports and imports can affect the AD/AS model?

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Similar questions

What are some of the ways in which exports and imports can affect the AD/AS model?
Graphically show the likely short-run impact on US real GDP and aggregate price level using the AD/AS model. Explain your prediction. Which curve in the AD/AS model would a change in US consumer consumption affect? Note:- Please avoid using ChatGPT and refrain from providing handwritten solutions; otherwise, I will definitely give a downvote. Also, be mindful of plagiarism. Answer completely and accurate answer. Rest assured, you will receive an upvote if the answer is accurate.
Assume that an economy is initially operating at the natural rate of output (full employmentoutput). Use the AD-AS model to illustrate graphically the effects on price and output of areduction in government spending. Explain your assumptions with respect to the range ofaggregate supply of your analysis.
Which of the following is a major difference between the AD-AS model and the dynamic AD-AS model? The dynamic AD-AS model assumes OA. AD only includes consumption, investment, and government purchases, while the AD-AS model assumes AD includes consumption, investment, government purchases and net exports. B. the SRAS is stable and will not shift, while the AD-AS model assumes the SRAS can only change with an exogenous event such as oil price changes. OC. the economy does not experience long-run growth, while the AD-AS model assumes there is constant inflation in the economy. OD. potential GDP increases continually, while the AD-AS model assumes the LRAS does not change.
Suppose concerns about the size of the federal budget deficit lead theU.S.Congress to cut all funding for research and development for ten years. Assuming this has an impact on technology growth, what does the AD/AS model predict would be the likely effect on equilibrium GDP and the price level?
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 that the United States' macroeconomic equilibrium is equal to the potential GDP. Americans are becoming more cautious with their household spending due to the uncertainty of the presidency of Donald Trump. Using the AD-AS model, explain carefully the immediate and long-term effects of the event on the economy. Draw the appropriate AD-AS diagram to support your explanation.
6.1.What is an AD-AS model and what does such a model as per the givendiagram essentially focus on?6.2.Discuss the diagram in detail by first explaining what leads to step Step 1(representing a shift in curves on the diagram) and indicating what occursto cause shifts in some of the curves. Then discuss Step 2 (whichrepresents other macroeconomic changes) and indicate what happens toother variables when there are shifts in some of the curves as per Step 1. 6.3.What, in general, do the points of intersection between the AS and AS2curves and the AD curve show?6.4.When the LAS curve moves to the right to LRAS2, what exactly do thepoints of intersection between the AS and AS curves and the AD1 curve,indicated as point 1 and point 2, reflect on the diagram?
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.
Draw an AD/AS model in purely competitive long run initial equilibrium. Label the price level P*=100 and YF=10. Label the SRAS1 and the AD1 curve. Label the LRAS1 curve. Be sure to also label both axis correctly.] Draw a graph of the "business cycle." Show the long run growth trend line (put a trend percentage the "makes sense") and the cyclical curve around that trend line. Be sure to also label both axis correctly. Label point A on both graphs in #1 and #2 above. Then on graph in #1, indicate the full employment level (i.e., the "usual" unemployment rate in LR initial equilibrium) at point A for YF* (at full potential output) in initial equilibrium. Assume an Increase in AD for any reason (increase in Aggregate Demand) and show it on graph #1 above. Then, Label point B on all applicable graphs above (after the increase in AD), at the intersection of the new equilibrium. -is point B a Short run or Long run equilibrium point? -Indicate the new unemployment rate at Point B that makes…
Considering the growing potential threat of terrorists’ attacks worldwide, the President of an economyapproved a fiscal spending of $24 billion to upgrade its national defense. a. Starting in a long-run equilibrium, draw a well-labelled AD-SRAS-LRAS diagram for the economy. b. Use the same diagram in part (a) to show the SR effect on the economy’s GDP (Y), the price level, andunemployment when the federal government increases its spending on national defense. c. To stabilize the price level and the economy’s GDP, what kind of monetary policy should the economyadopt? Illustrate your answer in the same diagram in (a).
Refer to the figure below. Price Level LRAS " SRAS, AD SRAS, ADI Quantity of Output Suppose the economy starts at P₁ and Y₂. If there's a substantial investment tax credit offered by the government, what happens to the economy in the short run AND in the long run if the government does nothing. Use the AS-AD model to explain.