Question

In: Economics

Use the graph below to help you analyze and explain how the following event affects the...

Use the graph below to help you analyze and explain how the following event affects the variables a through d: (1 point each)

Event: Manufacturing technology improves.

a) Aggregate Demand or Aggregate Supply?

b) Increases or decrease Equilibrium Price level?

c) increase or decrease Real GDP?

d) increase or decrease Unemployment rate?


Solutions

Expert Solution

A) Improvement in technology will decrease cost of production ,as a result aggregate supply will increase and shift to right.

B) Increase in aggregate supply and no change in aggregate demand ,will result in Decrease in equilibrium price level.

C) Increase in aggregate supply and lower price level result in increase in real GDP.

D) Increase in aggregate supply result in firms hiring more people ,whicb result in Decrease in unemployment.

Rahul Sunny answered 2 years ago
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