Suppose Canada's economy is in a long-run equilibrium with real GDP equal to potential output. Now suppose there is a decrease in world demand for Canada's goods. In the short run, OA. real GDP and the price level both fall; real GDP returns to its original level with a lower price level OB. real GDP rises and the price level falls; real GDP returns to its original level with a higher price level OC. real GDP and the price level both rise; real GDP is below its original level with a higher price level O D. real GDP falls and the price level rises; real GDP is below its original level with a lower price level In the long run,

Suppose Canada's economy is in a long-run equilibrium with real GDP equal to potential output. Now suppose there is a decrease in world demand for Canada's goods. In the short run, OA. real GDP and the price level both fall; real GDP returns to its original level with a lower price level OB. real GDP rises and the price level falls; real GDP returns to its original level with a higher price level OC. real GDP and the price level both rise; real GDP is below its original level with a higher price level O D. real GDP falls and the price level rises; real GDP is below its original level with a lower price level In the long run,

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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A decrease in the price of foreign oil will affect the U.S. economy by O a. decreasing aggregate supply. O b. increasing aggregate demand. O c. increasing aggregate supply. O d. decreasing aggregate demand
Suppose the economy is in long-run equilibrium. Then because of the COVID pandemic, people become worried about their future income and retain that worry for some time. How is the new long-run equilibrium different from the original one? O a. the price level is the same and GDP is lower. O b. both price and real GDP are higher. O c. the price level is lower and real GDP is the same. O d. both price and real GDP are lower.
Price level (GDP price index, 2012 = 100) Potential Potential GDP, AS, GDP2 AS2 Real GDP (trillions of 2012 dollars)
A price-level increase, Ceteris Paribus, will: Select one: O a. cause an upward movement along the aggregate demand curve. O b. cause a downward movement along the aggregate demand curve. O c. cause a rightward shift of the aggregate demand curve. O d. have no impact on the aggregate demand curve. O e. cause a leftward shift of the aggregate demand curve.
QUESTION 7 Suppose a hurricane destroys 20% of the capital stock in a country. In the long run, output will O a. remain unchanged; remain unchanged O b. decrease; decrease c. decrease; increase O d. remain unchanged; increase O e. decrease; remain unchanged QUESTION 8 Menu costs help to explain: O a. why the long-run aggregate supply curve is horizontal. b. the negative slope of the aggregate demand curve. O c. why the long-run aggregate supply curve is vertical. O d. the negative slope of the aggregate supply curve. O e. the positive slope of the short-run aggregate supply curve. QUESTION 9 Suppose new drilling techniques increase the world oil supply. In the long run, output will O a. increase; remain unchanged a b. increase; increase C c. remain unchanged; remain unchanged O d. remain unchanged; decrease O e. increase; decrease and the price level will and the price level will
Consider the following graph. Suppose the economy is currently at point A. Suppose there is a temporary decrease in the prices of raw materials. (Raw materials are used for production.) The economy will go to point, in short run, and then point in long run. Price level O C; B OB;A OB; C O CA ODA Question 2 LRAS - O vertical straight; increase by 10 percent O upward sloping: decrease by 10 percent O vertical straight; remain unchanged O downward sloping: increase by 10 percent Odownward sloping: decrease by 10 percent SRAS₁ SRAS AD Real GDP (Y) 4 LRAS is a(n) line. If the price level drops by 10 percent, then all else being equal, the long- run quantity of aggregate supply will
In the figure, as the price level increases the aggregate demand curve will Price level (GDP price index, 2012 = 100) A. not shift. O B. not shift, but the aggregate demand curve will change so that it is positively sloped. O C. shift from AD, to AD, O D. shift from AD, to AD, and then back to AD,. E. shift from AD, to AD3. AD2 AD3 AD1 Real GDP (trillions of 2012 dollars)
If Aggregate Demand is at AD2, production will be high as possible. Can production stay at this level foever? Price Level Price Level GDP POTENTIAL AD₁ GDP POTENTIAL AS GDP MAX AD₁ AS GDP MAX AD2 GDP AD2 GDP Select one: O a. No, because eventually, higher aggregate demand will raise prices, and this will make some people less willing to do additional work Oc. All of these are true Od. Yes, because this is maximum production e. None of these are true O b. No, because eventually higher aggregate demand will cause prices to fall, and this will make producers decide to produce less
Which of the following statements is correct? O A. The price level does not effect the level of real GDP demanded. O B. The higher the price level, the more.the aggregate demand curve shifts rightward. OC. The lower the price level, the greater the quantity of real GDP demanded O D. The lower the price level, the more the aggregate demand curve shifts leftward. E. The lower the price level, the more the aggregate demand curve shifts rightward.
A candidate for political office announces the following policies which, she says, economics clearly demonstrates will lead to higher output in the long run: 1. increase immigration from abroad 2. make trade more open between the US and other countries. Select one: O a1 shifts long-run aggregate supply right, 2 shifts long-run aggregate supply left. O b. 1 and 2 both shift long-rum aggregate supply right. O c. 1 shifts long-run aggregate supply left, 2 shifts long-run aggregate supply right. O d. 1 and 2 both shift long-run aggregate supply left.
Consider the graph at right showing the long-run aggregate supply (LAS) and the aggregate demand (AD) curves. Suppose the long-run aggregate supply curve shifts to a real GDP level of $75. O A. The equilibrium price level will fall, and equilibrium real GDP will decrease. B. The equilibrium price level will fall, and equilibrium real GDP will increase. C. The equilibrium price level will rise, and equilibrium real GDP will increase. OD. The equilibrium price level will rise, and equilibrium real GDP will decrease. ----- Price level Po LRAS AD 0 10 20 30 40 50 Real GDP 60 70 80 90 100
The graph shows an economy's potential GDP and the aggregate supply curve. Draw an arrow that shows a rise in the price level when the money wage rate remains unchanged. Label it 1. Draw an arrow that shows a rise in the price level accompanied by the same percentage rise in the money wage rate and the money prices of other resources. Label it 2. What is the effect of an increase in the price level when the money wage rate remains unchanged? O A. Aggregate supply increases. O B. The quantity of real GDP supplied increases. Resource prices increase by the same percentage as the increase in the price level. O C. OD. Potential GDP increases. 145- 135- 125- 115- 105- 95- Price level (GDP price index, 2012=100) 85+ 18.0 Potential GDP A$ 22.0 Q 19.0 20.0 21.0 Real GDP (trillions of 2012 dollars) >>> Draw only the objects specified in the question.