The figure below is a part of the AD-AS model as a description of the current...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
The figure below is a part of the AD-AS model as a description of the current situation of an economy. PA=$10 c) d) P YA=4000 Y a) Find the short-run equilibrium (i.e. the real output and the price level thereof) of this economy. (4 marks) b) If the natural level of output is 3500, which one will be higher, the unemployment rate at point A, or the natural unemployment rate? Explain. (4 marks) Give two reasons as to why the short-run aggregate supply is upward sloping. (4 marks) Suppose the government takes no action about the situation indicated above. Explain, with the help of a figure properly labeled, what will happen in this economy in the long (7 marks) run. e) Describe the two kinds of macroeconomic policies that can be used in the situation described before part c). Indicate clearly in your description whether each policy is to affect the aggregate demand or aggregate supply or both. Further, give reason(s) as to why the government may want to use these policies rather than doing nothing. (6 marks) The figure below is a part of the AD-AS model as a description of the current situation of an economy. PA=$10 c) d) P YA=4000 Y a) Find the short-run equilibrium (i.e. the real output and the price level thereof) of this economy. (4 marks) b) If the natural level of output is 3500, which one will be higher, the unemployment rate at point A, or the natural unemployment rate? Explain. (4 marks) Give two reasons as to why the short-run aggregate supply is upward sloping. (4 marks) Suppose the government takes no action about the situation indicated above. Explain, with the help of a figure properly labeled, what will happen in this economy in the long (7 marks) run. e) Describe the two kinds of macroeconomic policies that can be used in the situation described before part c). Indicate clearly in your description whether each policy is to affect the aggregate demand or aggregate supply or both. Further, give reason(s) as to why the government may want to use these policies rather than doing nothing. (6 marks)
Expert Answer:
Related Book For
Posted Date:
Students also viewed these accounting questions
-
In which of the following is a trait influenced by both polygenic and environmental factors? (a) Multifactorial trait (b) Sex-linked (c) Incomplete dominance (d) Multiple-allele inheritance
-
1)Which of the following is not true with respect to fixed overhead costs? a) They do not automatically increase or decrease with the level of activity within the relevant range. b) Although fixed...
-
For which of the following is the K sp value of the ionic compound the largest? The smallest? Explain your answer. ()
-
What is a derivative contract? Give an example. How are derivatives related to risk management?
-
Show that an owner of P. V. Ltd. in Example would not care whether P. V. Ltd. paid any dividend at the end of year 1. Assume that the good- economy state was realized in year 1.
-
1. How effectively do you think Rachel spent her day? 2. What does the case tell you about what it is like to be a project manager? Rachel, the project manager of a large information systems project,...
-
On June 14, 1988, Thomas John Heck Jr. executed a note promising to pay Paul D. Heck \($51,000\) at 7 percent interest compounded annually. The note contains the following payment terms: Perpetual 90...
-
Hamilton County Parks is planning to develop a new park and recreational area on a recently purchased 100-acre tract. Project development activities include clearing playground and picnic areas,...
-
If V f(xz, y/z), prove that zV =xVx-yVy. =
-
On January 1, Year 5, Pic Company acquired 7,500 ordinary shares of Sic Company for $600,000. On January 1, Year 6, Pic Company acquired an additional 2,000 ordinary shares of Sic Company for...
-
1. Marble Arch in London is a monument with three arches - one large and two smaller. The smaller arches are each 3.66m high at their apex and 1.83 wide at the base. By modelling these arches as...
-
What criteria would you use to determine if AI is appropriate for a business? Explain the use of this criteria and use references.
-
Assume that sales for 2020 are $5,600 million. What would capex be for 2020? Format $1234.56 million as 1235 Your Answer:
-
Write a speech for a company to increase its sales and profitability. The speech must be something a company president would present to his/her team.
-
If "The New York Times" went out of business, would it matter? Are smaller online competitors (e.g., Vice, Vox) the future of news?
-
Jack sells land to Jill in 2022 for $75,000 cash plus Jill's note for $225,000. Jack's basis for the property was 120,000. The note will be repaid as follows: $100,000 in 2023 and the balance in...
-
Annuities that will pay $500 twice per year for the next 5 years (i.e., 10 payments in all) are being issued today at the arbitrage-free price of $3850 per annuity. Coupon bonds having maturity 5...
-
What can scientists learn by comparing the fossilized skeletons of extinct primates with the bones of modern species?
-
A lot of parts contains 500 items, 100 of which are defective. Suppose that 20 items are selected at random. Let X be the number of selected items that are defective. a. Express the quantity P(X = 5)...
-
A sample of 100 resistors has an average resistance of 50 and a standard deviation of 5 . A second sample of 100 resistors has an average resistance of 100 and a standard deviation of 5 . If the...
-
A medical researcher wants to determine whether exercising can lower blood pressure. At a health fair, he measures the blood pressure of 100 individuals, and interviews them about their exercise...
-
Please list possible definitions of the term embedded system!
-
How would you define the term cyber-physical system (CPS)? Do you see any difference between the terms embedded systems and cyber-physical systems?
-
What is the Internet of Things (IoT)?
Study smarter with the SolutionInn App