State whether each of the following events appears to be the result of a shift in...

State whether each of the following events appears to be the result of a shift in short?run aggregate supply or aggregate demand, and state the direction of the shift involved. a) The price level rises sharply while real GDP falls. b) The price level and real GDP rise. c) The price level falls while real GDP rises. d) The price level and real GDP fall. To the Tutor: Please be clear and explanatory. Will be appreciated. Thank you.

Solutions

Expert Solution

A shift in the aggregate supply curve to the left.

Explanation: A decrease in the aggregate supply with aggregate demand being the same, causes an excess demand. Thus the equilibrium level of real GDP falls. This thus puts a upward pressure on the prices.

A shift in the aggregate demand curve to the right.

Explanation: An increase in the aggregate demand with aggregate supply being the same, causes an excess demand. Thus the firms expand output in response to rising demand the GDP rises. Thus the equilibrium level of real GDP rises. This thus puts a upward pressure on the prices.

A shift in the aggregate supply to the right.

Explanation: The increases aggregate supply shift the AS curve to the right. Thus the new AS curve cuts the old AD at higher output level. An increase in the aggregate supply with aggregate demand being the same causes an excess supply. The excess supply also puts a downward pressure on the prices.

A shift in the Aggregate demand curve to the left.

Explanation: An crease in the aggregate demand with aggregate supply being the same, causes an excess supply. Thus the firms have unintended inventory accumulation, they thus cut back production and hence real GDP falls. The excess supply also puts a downward pressure on the prices.

Rahul Sunny answered 1 year ago

Next > < Previous

Related Solutions

State whether each of the following events will result in a movement along the demand curve...

State whether each of the following events will result in a movement along the demand curve for McDonald’s Big Mac burgers or whether it will cause the curve to shift. If the demand curve shifts, indicate whether it will shift to the left or to the right and draw a graph to illustrate the shift. a. The price of Hungry Jack’s Whopper burgers declines. b. McDonald’s distributes vouchers for $1.00 off on a purchase of a Big Mac. c. A...

In each of the following scenarios, state whether the labor supply curve would shift to the...

In each of the following scenarios, state whether the labor supply curve would shift to the left, to the right, not shift at all, or if the shift is ambiguous because there is more than one effect and they would move the curve in opposite directions. (a) The stock market rises sharply. (b) Fewer teenagers work while in school than before. (c) A large fraction of the population flees the country because of a bird flu epidemic. (d) The expected...

Identify whether each of the below events would cause a shift in AD or AS: Aggregate...

Identify whether each of the below events would cause a shift in AD or AS: Aggregate Demand Aggregate Supply Shift to the Right Shift to the left The government announces a 1% increase of VAT (Value-added Tax) There is a sustained drought for 1 year on major plant fields There is a sustained increase in the value of the Saudi Riyal against the Pound on the foreign exchange market The government announces spending on a new rail-way between Jeddah and...

Each of the following events caused a shift in the AD or AS curve in Canada....

Each of the following events caused a shift in the AD or AS curve in Canada. Identify which curve was affected and describe the effect of equilibrium real GDP and the price level. a) The end of the Cold War in 1990 led to large declines in Defense spending in many countries (including Canada) b) The federal government and (many) provincial governments reduced corporate income-tax rates between 2000 and 2011. c) The federal government increased its level of government purchases...

For each of the following variables, state the scale of measurement that each variable appears to...

For each of the following variables, state the scale of measurement that each variable appears to represent, and make sure to provide a brief rationale for your decision. The primary language of an individual’s grandmother IQ scores Reading comprehension ability of eighth-grade students, as demonstrated by their percentile rank performance (relative to a national norm) in a standardized reading comprehension test. House numbers The system of military grades for those enlisted in the U.S. Navy

State whether each of the following is a group

State whether each of the following is a group.(a) All the real numbers with the rule of combination for forming the product of two elements being addition.(b) All positive integers with the rule of combination being multiplication.(c) All real numbers except zero, with the rule of combination being multiplication.

Explain what will happen as a result of the following events. In each case, draw an...

Explain what will happen as a result of the following events. In each case, draw an aggregate demand and short-run aggregate supply diagram showing the initial equilibrium output level (Y0) and price level (P0). Show any changes and indicate the final equilibrium output level and price level. A. The economy is operating near full capacity. Now environmental pollu¬tion standards are tightened substan¬tially. B. The economy is operating near full capacity. An import tax (tariff) is imposed on foreign consumer goods,...

For each of the following scenarios, state whether there is or is not a contract, and...

For each of the following scenarios, state whether there is or is not a contract, and why: 1. Bob and Mary were talking at a bar on Thursday night. Bob wrote the following on coaster and handed it to Mary: “I promise to pay you $1,000 to dance with man at the bar in the Gray Shirt” Mary read the coaster, signed it, and danced with the man in the gray shirt. 2. Mr. Wilson said to 18 year old...

For each of the following events, -State if the demand for loanable funds or the supply...

For each of the following events, -State if the demand for loanable funds or the supply of loanable funds (or neither) will be affected -Then state if the curve will increase or decrease -Finally indicate the direction of the shift(left or right) Events: A. The government deficit increases. B. People decide to save more C. Net capital outflow increases at each interest rate. D. Domestic investment increases at each interest rate.

For each of the following forward reactions state the significance of the result. For example, a...

For each of the following forward reactions state the significance of the result. For example, a patient cell is tested with anti-B and gives a positive reaction. The significance is that this indicates the presence of the B antigen on the unknown red cell. Typing serum reaction Significance anti-A 4+ anti-B 0 anti- A 0 anti-B 3+ mf

Subjects