a. Which set of data illustrates aggregate supply in the immediate short-run in
ID: 1200806 • Letter: A
Question
a. Which set of data illustrates aggregate supply in the immediate short-run in North Vaudeville? The data in . Which set of data illustrates aggregate supply in the short run in North Vaudeville? The data in . Which set of data illustrates aggregate supply in the long run in North Vaudeville? The data in . b. Assuming no change in hours of work, if real output per hour of work decreases by 15 percent, what will be the new levels of real GDP in the right column of B? Instructions: Round your answers to 2 decimal places. With a price level of 110, new output = . With a price level of 100, new output = . With a price level of 95, new output = . With a price level of 90, new output = . Does the new data reflect an increase in aggregate supply or does it indicate a decrease in aggregate supply?
Explanation / Answer
Part a: Which set of data illustrates aggregate supply in the immediate short-run in North Vaudeville? The data in B. The price level does not have time to adjust in the immediate short-run. Only output can change. Which set of data illustrates aggregate supply in the short-run in North Vaudeville? The data in A. The price level only has time to partially adjust in the short-run. Both the price level and output can change. Which set of data illustrates aggregate supply in the long-run in North Vaudeville? The data in C. The price level has time to completely adjust in the long-run. Only price will change. Part b: Assuming no change in hours of work, if real output per hour of work increases by 15 percent, what will be the new levels of real GDP in the right column of A?
To find the new level of output at each price level multiply the original values by 1.15. Price level 110: New output equals 316.25 (=1.15 x 275) Price level 100: New output equals 287.5 (=1.15 x 250) Price level 95: New output equals 258.75 (=1.15 x 225) Price level 90: New output equals 253(=1.15 x 200) Does the new data reflect an increase in aggregate supply or does it indicate a decrease in aggregate supply? This is an increase in aggregate supply because output has increased at every price level.
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