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