Consider the table on the right, which shows businessinvestment in inventories for each quarter from the firstquarter of 2007 to the first quarter of 2012, measured inmillions of 2007 dollars. Provide a macroeconomicexplanation for this pattern. (Hint: When did the recessionduring this period begin and end?)The negative growth of inventories indicates a period ofOA. inflation since inventories needed to be reducedin the face of increasing storage costOB. recession because demand was met by drawingdown past inventories and production did notincrease.OC. recovery since inventories needed to be used tomeet demand.OD. recession because inventories increased due tolack of demandYear2007200820092010201120122013QuarterQ1308889Q2Q3Q4R288828Q1Q2Q3Q4Q1228892889Q2Q3Q4Q1Q2InventoryInvestment(millions of2007 dollars)$3360- 282215,57019,6446061951211,8564699-23647779-4807- 4807266325084841-6805896512,153646221792061729814,09138756031

Business cycle: A business cycle, also known as an economic cycle or trade cycle, refers to the…

Answered: Consider the table on the right, which…

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 5SCQ: Suppose the U.S. Congress passes significant immigration reform that makes it more difficult for...

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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?
Suppose the U.S. Congress passes significant immigration reform that makes it more difficult for foreigners to come to the United States to work. Use the AD/AS model to explain how this would affect the equilibrium level of GDP and the puce level.
What impact would a decrease in the size of the labor force have on GDP and the puce level according to the AD/AS model?
1. Key facts about economic fluctuations The graph included below approximates United States business cycles between quarter one of 1947 and quarter three of 1951. The shaded region denotes periods of six or more consecutive months of declining real gross domestic product (real GDP). W 1048 1040 1000 YEAR REAL GDP (Billions of dollars) 2170 2070 1970 1870 1770 1047 1001 Source: "Current-dollar and Real GOR" Bureau of Economics Analysis. last modified May 1, 13. accessed May 15. 13. http://www.bea.gov/national/xl/gdplev.. Notice that real GDP trends upward over time but experiences ups and downs in the short run. These short-run fluctuations in real GDP are often referred to as
Consider an economy that only produces two goods: Boomerangs and Vegemite. Prices and quantities produced in two years are given by the following table: Price Boomerangs $5 Vegemite (in cans) $2 $613.800 $607.500 Year 1 $620.100 $605.573 Quantity 50 100 Compute Real GDP in year 2 by applying the Chain-Weighting approach. Use year 1 as the reference year. (Round your final and preliminary results using three decimal places.) Year 2 Price $6 $3 Quantity 80 110
Cosider the following data on U.S GDP:a.What was the growth rate of nominal GDP between 1994 to 2014?b.What was the growth rate of the GDPdeflator between 1994 to 2014?c.What was the real GDP in 1994 measured in 2009 prices?d.What was the real GDP in 2014measured in 2009 prices?e.What was the growth rate of the GDP between 1994 to 2014?f.Was the growth rate of nominal GDP higher or lower than the growth rate of real GDP?Explain.
What does it mean when the aggregate expenditure line crosses the 45-degree line? In other words, how would you explain the intersection in words?
Analyzing macroeconomic events with the IS curve (II): Consider the followingchanges in the macroeconomy. Show how to think about them using the IScurve, and explain how and why GDP is afected in the short run.
Can you inform from the graph the movement of the price level in the economy since the beginning of 2021? Explain GDP Were we ever in a recession during the period? How do you know?
In the first quarter of 2020, US real GDP declined about 9%, due to the economics shocks from the Covid 19 virus. If prices were completely flexible, and this means all prices, both inputs (such as labor), as well as output prices, what would you think would have been the drop in GDP? If prices are completely fixed, would the drop in GDP be greater or less than the flexible case? Why? If the Expenditure method of accounting for GDP, has to equal the Income Side, and the economy overproduces a particular item, say automobiles, the income side will also be higher, workers will buy the extra cars with extra income and the economy can gyrate indefinitely higher? Why or why not?
Businesses in the nation of Islandia have been accumulating cash because they have a pessimistic outlook of the national economy. Recent changes in the economic outlook of Islandia have caused business leaders to begin to invest some of their accumulated cash. Suppose that businesses in the country invest a total of $40 billion of this cash. Instructions: Enter a positive number to show an increase and a negative number to show a decrease. a. What would be the maximum expected change in GDP if Islandia's marginal propensity to consume (MPC) is 0.75? $ billion b. Suppose that the recent economic outlook in the country of Mountainia has been the opposite. Businesses have postponed planned investments and have begun to accumulate cash. If businesses in Mountainia postpone $12 billion of their planned investments, what would be the maximum expected change in GDP if its marginal propensity to save (MPS) is 0.05? $ billion
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