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- “It is not the continued shift of the SRAS curve that causes continued inflation”. Explain this statement. You may use a diagram for your explanation. Don,t copy from anywher. Do answer step by step. Answer Must be correct.Alter the interactive graph in order to witness how a leftward shift of the IS curve affects the output gap and unexpected inflation. Use the information to forecast economic outcomes. a. Which of the following could explain the shift witnessed in the IS-MP framework and result in lower unexpected inflation? Decreased business confidence recently revealed in a recent business confidence index estimate. Recent legislation that reduced taxes. Recent legislation that reduced government spending on infrastructure. An increase in financial market risk, leading to a negative output gap. Decreased consumer wealth stemming from depressed asset prices. IncorrectEconomists expect that as the labor market continues to tighten going into the latter part of 2015 that workers should begin to expect wage increases in 2015 and 2016. Assuming this occurs and it was the only development in the labor market that year, how would this affect the AS curve? What if it was also accompanied by an increase in worker productivity?
- How is pressure for inflationary price increases shown in an AD/AS model?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?Brent, the international oil marker, hit US$130 a barrel on 8th March 2022. The oil price is close to 90 per cent above their level at the same point in time last year. Suppose that the rise in oil price is permanent. It creates an inflation shock and, at the same time, reduces potential output. With the aid of AD-AS model, show the difference in the effects of the oil price increase on output and the inflation rate in the long run if the government does not engage in stabilization policy and if the government does engage in stabilization policy to keep the inflation level low. Please elaborate your answer verbally.
- Which is the correct order once the AD or SRAS has shifted to start the inflation process? a. Prices increase in the shortage markets. b. Shortages develop in some markets. c. Prices throughout the economy rise. Aggregate demand functionwas Y=3300-3P last year, current year it looks likeY=3390-3P. SRAS curve is horizontal. Potential GDP is $3000 bln and it hasn'tchanged.Find out equilibrium GDP in the short-run and inflation rate in the long-run.Using AD-AS model illustrate the task.Consider a hypothetical country in which, initially, real GDP equals potential GDP. Suppose that consumer confidence decreases. All else equal (with regard to the AD-IA model), rel- ative to the short-run level, in the long run, inflation is
- What is the relationship in ADAS between oil price and inflation and also the unemployment rate? Given that Oil prices keep increasing The consumer price index keeps increasing The unemployment rate keeps decreasingConsider the AD/AS model below with a constant rate of inflation. No exogenous AD or AS shocks are occurring. Price Level P3 2 Po 0 FIGURE 29-1 Y" E3 E2 E1 Eo Real GDP AS3 AS2 AS1 ASO AD3 AD2 AD1 ADO Select one: O a an annual shift upward of the AS curve by 3%. b. an annual increase in the inflation rate of 3%. Oc. an annual shift upward of the AD curve by 3%. d. an annual increase in the equilibrium price level of 3%. Oe. Not applicable. The diagram shows the price level, not the inflation Refer to Figure 29-1. A constant rate of inflation of 3% is portrayed in an AD/AS diagram like this one asDefine inflation. Explain why inflations needs to be managed.
