"When the price level increases, aggregate planned expenditure increases and equilibrium expenditure increases." Is this statement...

"When the price level increases, aggregate planned expenditure increases and equilibrium expenditure increases." Is this statement correct? Discuss by giving appropriate examples of scenario, data and/or diagrams to justify your answer.

Expert Solution

Rahul Sunny answered 2 years ago

1. In the aggregate planned expenditure model, the equilibrium level of GDP can be determined by...

1. In the aggregate planned expenditure model, the equilibrium level of GDP can be determined by finding the output level at which the unplanned change in inventories is less than aggregate expenditures equal to government expenditures greater than aggregate expenditures equal to consumer spending equal to zero 2. The shape of the long-run aggregate supply curve suggests that Potential GDP is negatively related to the average price level Potential GDP is the amount of output that can be produced if...

When the expected price level increases, it causes short-run aggregate supply to shift to the

Question 9 When the expected price level increases, it causes short-run aggregate supply to shift to the left, and an increase in the actual price level does not shift short-run aggregate supply. right, and an increase in the actual price level does not shift short-run aggregate supply. left, and an increase in the actual price level shifts short-run aggregate supply to the left. right, and an increase in the actual price level shifts short-run aggregate supply to the right. Question 10 Suppose the...

(a) What is the equation for the aggregate expenditure function (AE)? (b) Determine the Equilibrium level...

(a) What is the equation for the aggregate expenditure function (AE)? (b) Determine the Equilibrium level of Output (Income) for this economy (c) If Investment (I) increases by $200 million, determine the new equilibrium level of Output (Income). Please show your work.

Which of the following would cause the aggregate price level to fall and the equilibrium level...

Which of the following would cause the aggregate price level to fall and the equilibrium level of real GDP to increase in the short run? Question 9 options: a) the short-run aggregate supply curve shifts left b) aggregate demand shifts left c) the short-run aggregate supply curve shifts right d) aggregate demand shifts right

As the price level increases, the aggregate demand curve will shift which way?

1) The slope of the Aggregate Demand curve shows that as the price level increases ____________________....

1) The slope of the Aggregate Demand curve shows that as the price level increases ____________________. Select the correct answer below: a) spending on consumption, investment, government purchases, and net exports decreases b) spending on consumption, investment, government purchases, and net exports increases c) spending on consumption, investment, government purchases, and net exports is unchanged d) none of the above 2) Which of the following are appropriate policy responses? Select all that apply: a) increasing government spending during recessionary gaps...

1. Identify the correct statement. Aggregate demand alone determines equilibrium price and output. A Aggregate supply...

1. Identify the correct statement. Aggregate demand alone determines equilibrium price and output. A Aggregate supply alone determines equilibrium price and output. B Aggregate demand shows the positive relationship between price level and real GDP. C Aggregate supply shows the negative relationship between price level and real GDP. D Aggregate demand and aggregate supply determine equilibrium price and output. 2. Assume that for a given year, the nominal interest rate is 9 percent while inflation rises to 11 percent indicating...

Aggregate Demand: Draw me an AD graph, start at the equilibrium of Price Level 5 and...

Aggregate Demand: Draw me an AD graph, start at the equilibrium of Price Level 5 and RGDP at 100.Show me what happens when people feel that the economy is “safer” and the spend more. Assume the shift changes Price Level by 2 and RGDP by 20. What effect from class is this and explain the shift.

Aggregate Supply: Draw me a SRAS(AS) graph, start at the equilibrium of Price Level 5 and...

Aggregate Supply: Draw me a SRAS(AS) graph, start at the equilibrium of Price Level 5 and RGDP at 100. Assume there is minimum wage law now in effect. The minimum wage is higher that the wage rate prior. Show me this, assume the shift changes Price Level by 2 and RGDP by 20. Explain the shift.

When the price level is above its equilibrium level, there is unplanned investment, with ...

When the price level is above its equilibrium level, there is ______ unplanned investment, with ______ products supplied than demanded.Multiple choice question.negative; fewerpositive; fewernegative; morepositive; more

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