130 120 SAS 110 A 100 AD 90 15.0 15.5 16.0 16.5 17.0 17.5 Real GDP (trillions of 2009 dollars) In the above figure, the economy is at point A when changes occur. If the new equilibrium has a price level of 100 and real GDP of $15.0 trillion, then it must be the case tha aggregate supply has increased. aggregate supply has decreased. aggregate demand has increased. O aggregate demand has decreased Price level (GDP deflator, 2009-100)

130 120 SAS 110 A 100 AD 90 15.0 15.5 16.0 16.5 17.0 17.5 Real GDP (trillions of 2009 dollars) In the above figure, the economy is at point A when changes occur. If the new equilibrium has a price level of 100 and real GDP of $15.0 trillion, then it must be the case tha aggregate supply has increased. aggregate supply has decreased. aggregate demand has increased. O aggregate demand has decreased Price level (GDP deflator, 2009-100)

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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The aggregate supply curve shows the relationship between the price level and the: O potential GDP in the economy. O total quantity of output that suppliers collectively produce. total quantity of output that buyers collectively plan to purchase. equilibrium GDP in the economy.
The figure given below represents the equilibrium real GDP and price level in the aggregate demand and aggregate supply model. Figure 8.3 U.S. Price Level 100 m 9 AS₁ to AS3 AS₁ to AS₂ AD₂ toAD3 O AD₂ to AD₁ O AD₁ to AD₂ AS AS₁ 200 300 400 500 Real GDP (billions of dollars) AD AS₂ In Figure 8.3, which of the following shifts would result in stagflation (economic stagnation and inflation)?
You are hired by the Council of Economic Advisors (CEA) as an economic consultant.The chairperson of the CEA tells you that she believes the current unemployment rate istoo high. The unemployment rate can be reduced if aggregate output increases. She wantsto know what policy to pursue to increase aggregate output by 300 billion TL. The bestestimate she has for the MPC is 0.8. Which of the following policies should yourecommend?a) Increase government purchases by 75 billion TL.b) Reduce taxes by 75 billion TL.c) Reduce taxes by 75 billion TL and to increase government purchases by 75 billion TL.d) Reduce the budget deficit by 300 billion TL
What effects would each of the following have on aggregate demandor aggregate supply, other things equal? In each case explain the expectedeffects on the equilibrium price level and the level of real output, assumingthat the price level is flexible both upward and downward. · A reduction in interest rates at each price level.· A major increase in spending for health care by the Federalgovernment.· A 10 percent across-the-board reduction in personal income taxrates.· A sizable increase in labor productivity (with no change innominal wages).· An increase in exports that exceeds an increase in imports (notdue to tariffs).
$ Which of the following would cause the Aggregate Supply curve to move from AS to AS2 in the graph below? fs Price Level 150 140 130 120 110 100 90 80 70 60 % 5 0 16 5 O A general increase in energy and labor cost for businesses. O A federal government increase in spending. t 6 10 15 Real GDP ($ billion) -AS-AD-AS2 2 fa lyi & 7 7 J * 20 8 8 num lk ( 25 (1¹) 9
Why is the aggregate demand curve downsloping? Specify how your explanation differs from the explanation for the downsloping demand curve for a single product. What role does the multiplier play in shifts of the aggregate demand curve?
Explain the influence of the following events on the quantity of real GDP supplied and aggregate supply in India. When fuel prices rise When the price level in India increases A. short-run aggregate supply decreases; the quantity of real GDP supplied increases O B. long-run aggregate supply decreases; short-run aggregate supply increases OC. long-run aggregate supply increases; the quantity of real GDP supplied increases OD. short-run aggregate supply increases; the quantity of real GDP supplied decreases The graph gives the long-run aggregate supply curve and the short-run aggregate supply curve for India. Suppose Canadian firms move their call handling, IT, and data functions to India. The full-employment price level does not change. If long-run aggregate supply changes, draw the new long-run aggregate supply curve and label it. If short-run aggregate supply changes, draw the new short-run aggregate supply curve and label it. Draw a point at the full-employment price level at…
Refer to the table below. Real Output Demanded, Billions Price Level Real Output Supplied, Billions $ 506 108 $ 513 508 104 512 510 100 510 512 96 507 514 92 502 Instructions: Enter your anwers as whole numbers. A). What is the equilibrium level of output? What is the equilibrium price level? B). Suppose that aggregate demand increases such that the amount of real output demanded rises by $ 7 billion at each price level. Insert the new values for real output demanded in the table below. Real Output Demanded, Billions New Real Output Demanded, Billions Price Level Real Output Supplied, Billions $ 506 108 $ 513 508 104 512 510 100 510 512 96 507 514 92 502 What is the new equilibrium level of output? What is the new equilibrium price level? By what percentage will the price level increase? Will this inflation be demand-pull inflation or will it be cost-push inflation? C) If potential real GDP ( that is, full-employment GDP) is $ 510…
Refer to Figure 9.1. When the price level rises and causes lower consumption expenditures, it is illustrated as: `AD2 AD1 ADo Aggregate output, Y O a move from Point B to Point A, but not a shift of the aggregate demand curve. O an aggregate demand curve shift from AD1 to ADO. an aggregate demand curve shift from AD1 to AD2. O a move from Point A to Point B, but not a shift of the aggregate demand curve. Price level, P
P4 AS2 AS, Aggregate output Y Figure 11.3 Refer to Figure 11.3. Hurricane Katrina destroyed a large portion of the infrastructure along the Gulf of Mexico coast. This caused Select one: a. the short-run aggregate supply curve to shift from AS 1 to AS 0- b. the short-run aggregate supply curve to shift from AS 1 to AS 2. c. the economy to move from Point C to Point B along AS 1. d. the economy to move from Point B to Point A along AS 1. Price level
The following graph shows an increase in aggregate demand (AD) in a hypothetical country. Specifically, aggregate demand shifts to the right from AD¡ 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, wwhere previously it was $300 billion. 170 100 150 140 130 120 AD2 110 AD, 100 00 + 100 200 300 400 500 00 700 800 OUTPUT (Billions of dollars) The following table lists several determinants of aggregate demand. Complete the table by indicating the change needed in each determinant to increase aggregate demand. Change Needed to Increase AD Wealth Тахes Expected rate of return on investment Incomes in other countries PRICE LEVEL
Aggregate demand is defined as O the relationship between the total quantity of goods and services demanded and the income level, all other determinants of spending unchanged. the relationship between the total quantity of goods and services demanded and the price level, all other determinants of spending unchanged. the demand for goods and services generated by all sectors in the economy, holding price level constant. O the relationship between the total quantity of goods and services demanded and the supply of factors of production, all other determinants of production unchanged.