Macroeconomics MyEconLab Ch.10.3 Study Plan Quiz

Does economic growth result from increases in aggregate​ demand, short-run aggregate​ supply, or​ long-run aggregate​ supply? Economic growth results from​ ______.

a growing supply of labor and increasing labor​ productivity, which increase​ long-run aggregate supply

The table shows the aggregate demand and​ short-run aggregate supply schedules of Lizard Island in which potential GDP is​ $600 billion. 1. Calculate the​ short-run equilibrium real GDP and price level. 2. Does the country have an inflationary gap or a recessionary gap and what is its​ magnitude? The country has​ _____ gap and its magnitude is​ $ _____ billion. 3. If real GDP demanded at each price level increases by​ $50 billion, what is the new​ short-run macroeconomic equilibrium and the output​ gap?

The​ short-run equilibrium real GDP is ​$575 billion and the price level is 110. a​ recessionary; 25 The new​ short-run macroeconomic equilibrium is at a real GDP of ​$600 billion and a price level of 120. The economy has no output gap.

In the​ graph, initially the aggregate supply curve is SAS0 and the aggregate demand curve is AD0. Some events change aggregate supply from SAS0 to SAS1. Describe two events that could have created this change in aggregate supply. What is the equilibrium after aggregate supply​ changed? If potential GDP is​ $1 trillion, does the economy have an inflationary​ gap, a recessionary​ gap, or no output​ gap? The events which could have changed​ short-run aggregate supply from SAS0 to SAS1 are​ ______. Following the change in aggregate​ supply, the new macroeconomic equilibrium is at​ ______. If potential GDP is​ $1 trillion, the economy​ has_______ gap.

a rise in the money wage rate or a rise in the money price of any other factor of production point A a recessionary

How do fluctuations in aggregate demand and​ short-run aggregate supply bring fluctuations in real GDP around potential​ GDP? Starting from a​ full-employment equilibrium, an increase in aggregate demand​ ______, and creates​ ______ gap. In the long​ run, the money wage rate​ ______, short-run aggregate supply​ ______, and the economy returns to a​ full-employment equilibrium. Starting from a​ full-employment equilibrium, a decrease in​ short-run aggregate supply​ ______ the price level and​ ______ potential GDP.

increases real GDP above potential​ GDP; an inflationary rises; decreases increases; decreases real GDP below