The following graph shows several shifts in the short-run aggregate supply (AS)
ID: 1117489 • Letter: T
Question
The following graph shows several shifts in the short-run aggregate supply (AS) and aggregate demand (AD) for a hypothetical economy. Initially, the economy is long-run equilibrium at its potential output, $80 billion. Note that you must determine from the scenario that follows whether the initial equlibrium is given by point P or R.
1. ADy/ASy/ADx/ASx
2. ADx/ADy/ASy/ASx
3.
4.
5. True/False
6. upward/downward
7.
8. is/is not
The following graph shows several shifts in the short-run aggregate supply (AS) and aggregate demand (AD) for a hypothetical economy. Initially, the economy is in long-run equilibrium at its potential output, $80 billion. Note that you must determine from the scenario that follows whether the initial equilibrium is given by point P or R PRICE LEVEL 140 130 120 100 ADx 90 PX 80 AD 70 60 60 65 70 75 80 85 90 95 100 REAL GDP (Billions of dollars] Suppose a bout of severe weather drives up agricultural costs, increases the costs of transporting goods and services, and increases the costs of producing goods and services in this economy. The increase in production costs causes a shift from short run. (Note: For simplicity, ignore any possible impact of the severe weather on potential output.) to and it moves the economy from point to point in the True or False: The short-run economic outcome resulting from an increase in production costs is known as stagflation O True O False In the absence of government intervention, the level of employment and output attained in the short run will eventually begin to put run to the long run. In the long run, the price level in the economy will be economy will be pressure on wages and prices as the economy transitions from the short , and the quantity of output in the billion. This consistent with the prediction made by the classical modelExplanation / Answer
Increase in transporation cost increase cost of production of good and thus decreases AS in the market causing leftward shift from ASy to ASx.
Movement of point from P to Q.
True because unemployment increases and inflation rises.
Downward
Price level will be $ 110
Quantity of output = 80 billions of dollars
is consistent
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.