If the aggregate supply (AS) curve is very steep, will expansionary fiscal or monetary policy have a bigger effect on real GDP or the price level? Draw a graph to support your answer to this question.
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- The aggregate demand curve portrays the relationship between price level and real GDP. What are the three reasons this relationship is a negative or inverse relationship? Provide brief illustrations of each.The full employment level of real GDP is $6 billion for the recently formed island nation of Turtleopolis. Use the line segment to show long‑run aggregate supply on the graph. Look at the image to adjustWhat happens to the output and price level if aggregate demand and aggregate supply curves shift in the same direction?
- How do changes in government spending and taxes affect the equilibrium price level and real GDP?On the following graph, plot the aggregate demand curve that results from varying the price level from 110 to 130 to 150, holding all else equal.6. Why the aggregate supply curve slopes upward in the short run In the short run, the quantity of output that firms supply can deviate from the natural level of output if the actual price level in the economy deviates from the expected price level. Several theories explain how this might happen. For example, the sticky-price theory asserts that the output prices of some goods and services adjust slowly to changes in the price level. Suppose firms announce the prices for their products in advance, based on an expected price level of 100 for the coming year. Many of the firms sell their goods through catalogs and face high costs of reprinting if they change prices. The actual price level turns out to be 110. Faced with high menu costs, the firms that rely on catalog sales choose not to adjust their prices. Sales from catalogs will , and firms that rely on catalogs will respond by the quantity of output they supply. If enough firms face high costs of adjusting prices, the unexpected…
- On the following graph, use the purple line (diamond symbol) to plot this economy's long-run aggregate supply (LRAS) curve. Then use the orange line segments (square symbol) to plot the economy's short-run aggregate supply (AS) curve at each of the following price levels: 100, 105, 110, 115, and 120. PRICE LEVEL 125 120 115 + 110 105 100 95 90 85 80 75 0 10 20 30 40 50 60 70 OUTPUT (Billions of dollars) 80 90 100 0 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 priceUse the figure to answer the following questions. Explain your reasoning and show your answers on the graph. Copy the image to MSWord, and draw the appropriate lines using the 'design' tab and then select the shapes you want to include, lines, arrows, etc. Save your answer and upload your file. a. At which equilibrium point the economy has an inflationary gap, and what is its value in percentage points? b. At what point the economy is at full employment, and what is its value in trillions of dollars? c. Draw an AD showing a recessionary gap of 0.5 trillion dollars. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.Draw a conventional aggregate demand curve on a graph. Then add three different aggregate supply curves, labeled AS1: Horizontal curve AS2: Upward-sloping curve AS3: Vertical curve all intersecting the AD curve at the same point. If AD were to increase which AS curve would lead to the least inflation? Show the graph roughly.
- What are three factors that help explain the slope of the aggregate demand curve? What is the most important factor? Why?6. Why the aggregate supply curve slopes upward in the short run In the short run, the quantity of output supplied by firms can deviate from the natural level of output if the actual price level deviates from the expected price level in the economy. A number of theories explain reasons why this might happen. For example, the misperceptions theory asserts that changes in the price level can temporarily mislead firms about what is happening to their output prices. Consider a soybean farmer who expects a price level of 100 in the coming year. If the actual price level turns out to be 90, soybean prices will and if the farmer mistakenly assumes that the price of soybeans declined relative to other prices of goods and services, the quantity of soybeans supplied. If other producers in this economy mistake changes in the price level for changes in their relative prices, the unexpected decrease in the price level causes the quantity of output supplied to level of output in the short run. she…Using a macroeconomics demand/supply analysis, where do you think current output is relative to what the economy is capable of producing? Look at recent trends in the data. What are the recent trends in the components of aggregate demand (consumption spending, investment spending, government purchases, and exports and imports?
