Answer the following questions about AD, SAS, and LAS: a) What does the AD curve show?...

Answer the following questions about AD, SAS, and LAS:

a) What does the AD curve show? (Hint: What is true at every point along the AD curve?)

b) Does the SAS curve slope upward or downward? Why is it sloped that way? Explain.

c) Predict, with the aid of the IS-LM and the SAS-AD models, the short-run and long-run results when consumer optimism increases. Assume the economy is initially in long-run equilibrium at the natural real GDP.

** Make sure to:

-Explain why each curve shifts.

-Clearly label the starting equilibrium.

-Clearly label at least 2 short-run equilibrium points.

-Clearly label the final long-run equilibrium.

- Explain what happens to the interest rate, output, price level, nominal wage, real wage in the short-run?

-Explain what happens to the interest rate, output, price level, nominal wage, real wage in the long-run?

Expert Solution

Rahul Sunny answered 2 years ago

Use the standard AD/AS model augmented with financial shocks to answer the following questions: a) Show...

Use the standard AD/AS model augmented with financial shocks to answer the following questions: a) Show the effect of an increase in credit spreads due to the failure of a large financial institution. What happens to output and inflation in the short-run? What happens in the long-run? b) Suppose that a financial crisis makes it difficult for firms to finance R&D expenditures. What effect might this have on potential output? Why? c) Show graphically the effect of a financial crisis...

Consider the aggregate supply-aggregate demand (AS-AD) model. The long run AS curve (LAS) is considered to...

Consider the aggregate supply-aggregate demand (AS-AD) model. The long run AS curve (LAS) is considered to be vertical at the full employment level of income. Discuss briefly 2-3 practical ways how the long run AS curve can be affected (increased) by carrying out certain government policies! Are there any risks associated with an increase in the long run AS in your examples (please, briefly discuss the risks involved)?

14. Describe and show the SAS curve in a graph. Why is it upward sloping? Be...

14. Describe and show the SAS curve in a graph. Why is it upward sloping? Be sure to explain the two different kinds of markets. 15. Describe and show the shift factors in the SAS curve? Include how each relates to both increases and decreases in SAS. 16. Describe and show the LAS curve. Include is what level of output is associated with. 17. What adjustment is possible from the SAS curve when we are underutilizing resources? When we are...

Answer the following questions about inflation: a) What is the generic inflation equation? b) What does...

Answer the following questions about inflation: a) What is the generic inflation equation? b) What does Friedman add to it? c) Who is inflation good for? Who is it bad for? d) Suppose inflation expectations are 3%, the employment gap is 2%, and supply shocks are 3%. What would the inflation rate be?

please answer the following questions about the Philips Curve: a) How has economic opinion changed about...

please answer the following questions about the Philips Curve: a) How has economic opinion changed about the Phillips curve since the 1960’s? b) Draw a standard Philips Curve. c) Draw a Philips Curve for the 1970

Show your work, the formulas used, and the substitutions to answer the questions about the following...

Show your work, the formulas used, and the substitutions to answer the questions about the following data: Can your high school GPA predict your college GPA? To try to answer this, the following data were collected: High School GPA: 1.72 3.51 2.45 2.85 2.84 3.46 1.97 3.47 College GPA: 2.61 3.66 3.25 3.23 3.46 3.07 2.88 3.16 Create a scatter plot of the data Find the equation of the regression line Calculate the correlation coefficient. Is there a significant correlation...

To answer the following questions about LMT's stock price, use the following multiple regression analysis (Show...

To answer the following questions about LMT's stock price, use the following multiple regression analysis (Show work). SUMMARY OUTPUT Regression Statistics Multiple R 0.988681823 R Square 0.977491746 Adjusted R Square 0.976307101 Standard Error 10.49117857 Observations 61 ANOVA df SS MS F Significance F Regression 3 272454.9563 90818.31876 825.1347922 6.64497E-47 Residual 57 6273.695181 110.0648277 Total 60 278728.6514 Coefficients Standard Error t Stat P-value Lower 95% Intercept -1931.41991 243.9210071 -7.918218817 9.39705E-11 -2419.863299 CPI 8.914424548 1.13956563 7.822651293 1.35489E-10 6.632483736 Nasdaq 0.020174909 0.005420724 3.721810856...

. Evaluate the effect of the following situations on the AD curve, AS curve, equilibrium price...

. Evaluate the effect of the following situations on the AD curve, AS curve, equilibrium price level, and equilibrium output in the U.S. (a) The U.S. imposes tariffs on foreign goods to promote domestic industry. In retaliation, foreign countries impose tariffs on U.S. goods. (b) Congress decides to decrease personal income taxes, and to compensate for the lost revenue they decrease business subsidies. (c) A technology boom improves technology across industries, improving their productivity. (d) U.S. oil...

1. Answer the following questions about the pancreas. (a) What is the general role of the...

1. Answer the following questions about the pancreas. (a) What is the general role of the pancreas in digestion? (b) When does the hepatopancreatic duct open? (c) What would you guess is the reason that many of the digestive enzymes produced by the pancreas are released as zymogens, rather than as fully functional enzymes? 2. Answer the following questions regarding the large intestine. (a) What is the main substance absorbed from the large intestine? (b) What do you consider the...

Then answer the following questions about each unit: What is the name of the unit that...

Then answer the following questions about each unit: What is the name of the unit that you found, and how is it commonly used? How do you convert an everyday quantity (mass of a candy bar, the volume of a soda can, length of a soccer field, etc.) into that unit?

Question