Econ chapter 8 homework
Long-run macroeconomic equilibrium occurs when
the aggregate demand and short-run aggregate supply curves intersect at a point on the long-run aggregate supply curve.
Interest rates in the economy have fallen. How will this affect aggregate demand and equilibrium in the short run?
Aggregate demand will rise, the equilibrium price level will rise, and the equilibrium level of GDP will rise.
Suppose the economy is at full employment and firms become more optimistic about the future profitability of new investment. Which of the following will happen in the short run?
UE declines
Suppose the economy is in long-run equilibrium and there is an increase in investment. As a result, real GDP will ________ in the short run, and ________ in the long run.
increase, decrease to its initial value
In the dynamic aggregated demand and aggregate supply model, if AD shifts further than AS
inflation
In the long run: UE
is at its natural rate
whihc points have sr eq but not lr eq
b.d where sras and ad meet
Suppose the economy is at point C. If investment spending decreases in the economy, where will the eventual long-run equilibrium be?
moves down to where all 3 lines meet
Suppose the economy is at point A. If the economy experiences a negative supply shock, where will the eventual short-run equilibrium be?
neg supply shock moves left and its where ad and sras meet
decrease in investment causes the price level to ________ in the short run and ________ in the long run.
decrease, decrease further
suppose the economy is at point A. If investment spending increases in the economy, where will the eventual long-run equilibrium be?
everything moves up and long run is where all 3 intersect
An increase in aggregate demand results in a(n) ________ in the ________.
expansion, short run
which points are long run eq
A/C where all 3 lines meet
Which of the following is not an assumption made by the dynamic model of aggregate demand and aggregate supply?
AD and P RGDP decrease continously
In the dynamic aggregated demand and aggregate supply model, inflation occurs if
AD ctuve shifts more right than the LRAS curve
Suppose the economy is at a short-run equilibrium GDP that lies above potential GDP. Which of the following will occur because of the automatic mechanism adjusting the economy back to potential GDP?
Short-run aggregate supply will shift to the left.
Most recessions in the United States since World War II have begun with
decline residental construction
Which of the following is considered a negative supply shock?
uneexpetected (shock) decrease in refining cpacity for oil (has to be a supply good)
how to find inflation rate on graph
use the price level
how to find growth rate graph
use the real gdp numbers
