Q6. There is a decrease in AD. Show on an AD/AS diagram the effect on output...

Q6. There is a decrease in AD. Show on an AD/AS diagram the effect on output and prices in the short-run. State the effect on prices, output, unemployment, and wages next to the diagram. Assume we start at Q_s

Q7. There is a decrease in the cost of an input into the production of many goods. Show on an AD/AS diagram the effect on output and prices in the short-run. State the effect on prices, output, unemployment, and wages next to the diagram. Start at Q_N

Q8. Investment spending rises by $200. Make a table showing the effect on I, C, and GDP for each of 3 rounds and the total effect after all the possible rounds are completed if the MPC = 0.6. Then draw an AD/AS diagram showing the effect of the above on the macro-economy if we are far to the left of Q_N so the SRAS curve is flat.

Expert Solution

Rahul Sunny answered 2 years ago

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