Question 1.) At the new short run equilibrium the unemployment rate will[_____]

Question

Question 1.) At the new short run equilibrium the unemployment rate will[_____] ( reamin unchanged or be higher, or lower) Compared to the unemployment rate and the initial equilibrium prior to the increase in exports. Question 2.) which of the following best explains how the economy will just back to long-run equilibrium? A.) Aggregate demand will increase restoring the original equilibrium price and quantity. B.) Aggregate demand will decrease her store near additional delivery in price and quantity. C.) short run aggregate supply will increase shift upward as firms and workers adjusting the price level. D.) short run aggregate supply will decrease shift left ward as firms and worker adjust to new price level. Question 3.) at the new long-run equilibrium A.) Real GDP and the unemployment rate will remain the same but price level will be hired compared to the initial equilibrium prior to the increase in exports. B.) Real GDP and prices will be higher and the unemployment rate will be lower compared to the initial equilibrium prior to the increased exports C.) Real GDP in unemployment rate and the price level all will remain the same compare the initial equilibrium prior to the increase in exports. D.) Real GDP in the price level will be higher but the unemployment rate will remain the same compare to the initial equilibrium prior to the increase in exports.

Explanation / Answer

(1) , (2), (3) & (4): Points A, B and C are placed correctly.

(Question 1) In new short run equilibrium, unemployment rate will be Lower (since aggregate demand is higher, output is higher and demand for labor is also higher).

(Question 2) Option (D)

Long run equilibrium is restored when short run aggregate supply falls, SRAS shifts to left from SRAS1 to SRAS2.

(Question 3) Option (A)

In long run equilibrium (point C), price level is higher compared to that in point A, but real GDP is the same and unemployment rate is the same.

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