Macroeconomics
13th Edition
ISBN: 9780134744452
Author: PARKIN, Michael
Publisher: Pearson,
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Question
Chapter 10, Problem 26APA
(a)
To determine
Illustrate and explain the economic situation of Country B.
(b)
To determine
Explain the effect of low business and consumer confidence influence the aggregate demand and
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Based on the graph, a decrease in ________ could cause the economy to move from Point A to Point B.
a. the price level
b. consumer confidence
c. the labor force participation rate
d. wages
e. taxes on consumers
Draw an aggregate demand and supply diagram for Japan. In the diagram, show how each of the following affects aggregate demand and supply.
a. The U.S. gross domestic product falls.
b. The level of prices in Korea falls.
c. Labor receives a large wage increase.
d. Economists predict higher prices next year.
Price index
The graph below shows, the aggregate demand and supply for the economy of Etrusca.
a. Draw AD2 on the graph below assuming an increase of $60 in aggregate demand. Plot only the endpoints of the
curve below.
Your Graph Score: 0%
140
130
120
110
100
06
90
80
200 240 280 320 360 400 440 480 520 560
Real GDP
b. What is the new level of equilibrium GDP?
$
380
c. What is the new equilibrium price level?
55
AS
AD.
AD2
d. How much is the reduction in GDP due to the crowding out effect?
$
120
Chapter 10 Solutions
Macroeconomics
Ch. 10.1 - Prob. 1RQCh. 10.1 - Prob. 2RQCh. 10.1 - Prob. 3RQCh. 10.1 - Prob. 4RQCh. 10.2 - Prob. 1RQCh. 10.2 - Prob. 2RQCh. 10.2 - Prob. 3RQCh. 10.3 - Prob. 1RQCh. 10.3 - Prob. 2RQCh. 10.3 - Prob. 3RQ
Ch. 10.3 - Prob. 4RQCh. 10.4 - Prob. 1RQCh. 10.4 - Prob. 2RQCh. 10.4 - Prob. 3RQCh. 10 - Prob. 1SPACh. 10 - Prob. 2SPACh. 10 - Prob. 3SPACh. 10 - Prob. 4SPACh. 10 - Prob. 5SPACh. 10 - Prob. 6SPACh. 10 - Prob. 7SPACh. 10 - Prob. 8SPACh. 10 - Prob. 9SPACh. 10 - Prob. 10APACh. 10 - Prob. 11APACh. 10 - Prob. 12APACh. 10 - Prob. 13APACh. 10 - Prob. 14APACh. 10 - Prob. 15APACh. 10 - Prob. 16APACh. 10 - Prob. 17APACh. 10 - Prob. 18APACh. 10 - Prob. 19APACh. 10 - Prob. 20APACh. 10 - Prob. 21APACh. 10 - Prob. 22APACh. 10 - Prob. 23APACh. 10 - Prob. 24APACh. 10 - Prob. 25APACh. 10 - Prob. 26APA
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- 3 Two countries A & B have completely fixed and flexible prices respectively. Consider this data GDP A Prices A GDP B Prices B year 1 5200 units 26 5200 units 26 year 2 there occurs a negative demand shock. A has a 30% decline in output. B has a 30% decline in prices. Compute Real GDP in A and B in year 1 and 2. 4 answers. Which county would experience a recession? Why?arrow_forwardA recession will occur if an economy’s actual GDP ____ its potential GDP. a. rises above b. equals c. grows faster than d. falls belowarrow_forwardQuestion: The attached picture shows the aggregate demand/aggregate supply situation in the U.S. What is the value of actual GDP? What is the value of the GDP deflator? Assume that people and businesses become pessimistic about the future of the economy; how will this affect the graph above in the short run? (i.e., which curve(s) will shift, and in which direction?) After the short-run event in part b, what will happen to actual GDP? What will happen to the price level? After the short-run event in part b, describe how the economy is doing in terms of the business cycle (i.e., recession, full employment, expansion). What long-run adjustments will be made in this economy as a result of the short-run changes in part c? How will the curve(s) shift in response to these long-run adjustments? After the long-run adjustments in part e, describe how the economy is doing in terms of the business cycle (i.e., recession, full employment, expansion).arrow_forward
- 17 01:27:36 Use the following diagrams for the U.S. economy to answer the next question. AS₁ AS₂ 这 AD Real GDP (1) AS₂ AS, * AD (3) Real GDP (2) NY AD₂ AD₁ Real GDP AD₂ Real GDP AD₁ If the economy is initially at full employment, which of the diagrams best portrays a recession resulting from a decrease in government purchases?arrow_forwardWorksheet 5: Aggregate Supply and Aggregate Demand Name: Complete the questions below. Be sure to show your work. Upload this worksheet to Moodle. Consider the following Aggregate Supply and Aggregate Demand curves. 1. P Draw 10 8 6 4 2 69% 20 40 G93 AS/AD LRAS 60 80 SRAS AD 100 120 GDP 3. Does this graph represent a Recessionary Gap, an Inflationary Gap, or an economy that is operating at its potential output? Explain. the graph. Pregate Demand?arrow_forwardQuestion: How does the concept of aggregate demand relate to overall economic output, and what factors can influence changes in aggregate demand? A) Aggregate demand represents the total wealth of a nation and is unaffected by external factors. B) Aggregate demand is the total spending in an economy and includes consumption, investment, government spending, and net exports; factors like changes in consumer confidence can influence it. C) Aggregate demand solely considers government spending and is unrelated to economic output. D) Aggregate demand is the total production in an economy and is determined solely by government policies.arrow_forward
- Why do you think that GDP does not grow at a steady rate, but rather speeds up and slows down?arrow_forwardThe graph shows an economy that has experienced a fall in total spending. What is the long run output level in this economy? (Answer in trillions of $.) $_____arrow_forwardOver the past two years there has been a depletion of groundwater in thenation due to severe drought in the country. 1. Which of the two graphs above is correct? Explain why. 2. What happened to real GDP on the selected graph? Why? 3. What happened to the price level on the selected graph? Why? 4. What happened to the aggregate demand and the aggregate supply? Why?arrow_forward
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