Question

 Answer the following questions on the basis of the three sets of data for the country of North Vaudeville:

 a. Which set of data illustrates aggregate supply in the immediate short-run in North Vaudeville?

 The data in (Click to select).

 Which set of data illustrates aggregate supply in the short run in North Vaudeville?

 The data in (Click to select) ).

 Which set of data illustrates aggregate supply in the long run in North Vaudeville?

 The data in (Click to select) .

 b. Assuming no change in hours of work, if real output per hour of work decreases by 15 percent, what will be the new levels of real GDP in the right column of B?

 Instructions: Round your answers to 2 decimal places.

 With a price level of 110, new output =

 With a price level of 100, new output =

 With a price level of 95, new output=

 With a price level of 90, new output =

 Does the new data reflect an increase in aggregate supply or does it indicate a decrease in aggregate supply? 

Answer 1

a) 1. The data in set C.

Explanation:

Data set C shows aggregate supply in the immediate short-run because the price has no time to get adjusted, and only the real GDP changes.

2. The data in set B.

Explanation:

Data set B shows aggregate supply in the short-run because both the price and real GDP has time to partially get adjusted.

3. The data in set A.

Explanation:

Data set C shows aggregate supply in the long-run because the price enough time to get adjusted. So, only price will change and the real GDP will not changes.

b) With a price level of 110, new output = 290 * (1 - 0.15) = 246.5

With a price level of 100, new output = 265 * (1 - 0.15) = 225.25

With a price level of 95, new output = 240 * (1 - 0.15) = 204

With a price level of 90, new output = 215 * (1 - 0.15) = 182.75

Answer to the blank: Decrease