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All right, part (f). Which of the following defines a business goal for system restoration and. Assume the economy of andersonland answers. And notice, our equilibrium point right over here, let me call that aggregate demand right over here. So you see our price level goes up and our aggregate output, our GDP, our real GDP, goes up as well. The IRS position to not allow them to file as married was based on the Defense. And they say the short-run equilibrium we have an unemployment rate of 7% and an inflation rate of 3%. And now we have a different equilibrium real GDP, so that is going to be Y sub two.

Assume The Economy Of Andersonland Is In A Long-Run Equilibrium

And to buy imports, they would have to increase the supply of their currency in exchange markets because they want to convert it into foreign currencies to buy those imports, and so this will increase. Ii) What is the impact on the Long-run aggregate supply? AP® Macroeconomics (New & Experienced Teachers. Our unemployment rate is higher than the natural level of unemployment. Assume that the economy of Country X has an actual unemployment rate of 7%, a natural rate of unemployment of 5%, and an inflation rate of 3%.

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I) What component of aggregate demand will change? When labor becomes cheap enough, producers will make profit though aggregate demand may lag for a bit longer. Assume the economy of anderson land. Want to join the conversation? Watch me answer it here. So I could call that our long-run Phillips curve, and it's going to be right there at 5%. Aggregate Demand refers to the total quantity of services and commodities demanded in an economy at the existing price level. I drew it to the left of the full employment output because we are dealing with a recession here.

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Answer - One point is earned for stating that the long-run aggregate supply curve will shift to the right because the capital stock has increased. Why does AS in short run shift to the right when there's high unemployment in an economy? B) Identify one fiscal policy government could implement to reverse the change in investment spending. If the demand for it stays constant, but you increase the supply, and that's what we just talked about in part (e), well, then the price is going to go down. Part two, long-run Phillips curve, so that's this vertical line right over here. I don't understand the point that the firms increasing production simply because labor becomes cheaper in the situation where there's no demand. Answer and Explanation: 1. a) The long-run equilibrium is achieved at the point where AD, SRAS, and LRAS intersect. 4 - 4. Assume the economy of Andersonland is in a long-run equilibrium with full employment. In the short run, nominal wages are fixed. a) Draw a | Course Hero. Try it nowCreate an account. It'll just be a vertical line.

Assume The Economy Of Anderson Land

Materials to write on and with. As a grader of the AP Macroeconomics exam for the past 10 years and several years as a table leader, Julie has had the chance for exceptional professional development. This preview shows page 1 - 2 out of 2 pages. Upload your study docs or become a. Assume the economy of andersonland is in a long-run equilibrium. So this is going to be my unemployment rate which is going to be a percentage. All right, let me draw that. All right, we have more parts here. Well, if we want to reduce the unemployment rate, one way to do the that would be to shift aggregate demand to the right. Now let's go to part (c). So this is going to be so that we have our price level axis up here, and we just drew something very similar to this, real GDP. And one way to do that, would be to put more money in people's pockets, and one way to do that, is to have a tax cut.

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C) Based on your answer in part (b), what is the impact of the reduction in government spending on people who have a fixed income? In the long run, which of the following shift to the right, shift to the left, or remain the same? Using the numerical values given above, draw a correctly labeled graph of the short-run and long-run Phillips curves. The SRAS curve is upward sloping, while the LRAS curve is vertical. And now let's draw our short-run aggregate supply which we have seen before. Instructor: Julie Meek. 31 Annual Report 2018 19 C REMUNERATION TO KEY MANAGERIAL PERSONNEL OTHER THAN. And then if a lot of people are unemployed, they might be willing to work for less or they might have less money in their pocket with which to drive up the prices, and so you will have this inverse relationship right over here. If you said hey, we would change the federal funds rate or we would increase the money supply or decrease the money supply, those would be monetary actions. So one way to think about it, at a given price level, because there's people out there looking for a job, you might be able to get more output.

A) Identify the effect of the change in investment spending on each of the following: Real output. In the short-run is what you have to have noticed,,,, as wages can't adjust in the short-run,,, therefore if the price level is increasing and wages are not,, real wages are falling. And the thing to appreciate is the long-run Phillips curve or the long-run aggregate supply curve, these don't change unless something structurally changes in the economy, unless the economy changes in some very fundamental way, maybe a change in education levels, change in population, or change in technology. Think of increases in the capital stock as increasing efficiency and productivity and increasing the potential output of the economy. CHMN 301 Journal Article Summary Assignment. But here they're talking about aggregate supply. We could say wages come down which would shift the short-run aggregate supply curve to the right. And then they say, label the short-run equilibrium as point B. Ii) Equilibrium price level, labeled PL1. New container ships and equipment are increases in capital and therefore Investment will increase.

And so people say, hey, if you want me to work, you gotta pay me a little bit more, and so that could just lead to a higher inflation rate. Become a member and unlock all Study Answers. I would really appreciate your help here. Let me draw it like that. And we could say, because national income has gone up, people will buy more imports, so the supply of Country X's currency for exchange will go up. AP®︎/College Macroeconomics. Let's do the long-run first because we've seen before the long-run just sets our unemployment rate at the natural rate of unemployment, and it isn't related to our inflation rate. At any given price level, people are gonna want more. But what about the short-run aggregate supply curve? I drew it to the left of the long-run aggregate supply curve. And just think about what's going on.

They're saying a fiscal policy action, not a monetary policy. This video walks you through the concepts covered on an AP Macroeconomics Free Response Question. If price levels are low, people might not be willing to output a lot, and if price levels are high, people will output more. They're gonna demand more 'cause now they have more money in their pockets, and so it's going to shift to the right. So I'm gonna do the inflation rate in the vertical axis which is typical. You would have more output at a given price level. Course Hero uses AI to attempt to automatically extract content from documents to surface to you and others so you can study better, e. g., in search results, to enrich docs, and more. So if our actual unemployment rate is higher than natural rate of unemployment, what will happen to the short-run aggregate supply? I'll call that sub one, since we're gonna think about how it shifts, and then aggregate demand would look something like this. If you have previously taught the course, please bring your syllabus for reviewing and revising. That interest rate then lowers the investment demand. 3D Audio Content Deep Sen Qualcomm presented m27347 Description of Qualcomms HoA. So let me draw a graph to even help to visualize this.

Label the current short-run equilibrium as point B. Answer - One point is earned for stating that the investment component of AD will change. A copy of the textbook that you will be using, school calendar. Understand the aggregate demand-aggregate supply model and its features. The Foreign Exchange market answer towards the end for Q. e & f are not correct. Think of the business cycle. Materials to bring with you: - laptop computer.

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