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- The graph below shows the AD-AS diagram for Spain. Suppose that the economy is initially in long-run equilibrium with the price level of 900. Now suppose that the Aggregate Demand (AD) curve shifts left from AD1 (blue) to AD2 (green). 1200 AD 1100 1000 Price Level ADS 900- 800 79R ST 600* 500 400 300 200- 100- LRAS 100 200 300 400 500 600 700 800 900 1000 1100 120 Real GDP Q 1. What is the new GDP in the short-run as a result of this shift? I 2. What is the new price level in the short-run as a result of this shift? 3. What is the price new long-run equilibrium as a result of this shift? 4. What is GDP in the new long-run equilibrium as a result of this shift? 5. What causes the economy to move from the short-run equilibrium to the new long-run equilibrium? O Decreased wages. O increased wages. O Increased prices. O Decreased prices.Review the problem in the Work It Out titled"Interpreting the AD/AS Model." Like the informationprovided in that feature, Table 24.2 shows informationon aggregate supply, aggregate demand, and the pricelevel for the imaginary country of Xurbia. a. Plot the AD/AS diagram from the data. Identifythe equilibrium.b. Imagine that, as a result of a government taxcut, aggregate demand becomes higher by 50 atevery price level. Identify the new equilibrium.c. How will the new equilibrium alter output? Howwill it alter the price level? What do you thinkwill happen to employment?E3 Suppose the government of a typical developing country increased the salary of civil servants at a time when there is a bumper harvest due to timely rainfall. show using your knowledge of the AD-AS framework, What will happen to prices?
- What are some of the ways in which exports and imports can affect the AD/AS model?How is long-term growth illustrated in an AD/AS model?Many financial analysts and economists eagerly await the press releases for the reports on the home price index and consumer confidence index. What would be the effects of a negative report on both of these? What about a positive report?
- Suppose Mexico, one of our largest trading partners and purchaser of a large quantity of our exports, goes into a recession. Use the AD/AS model to determine the likely impact on our equilibrium GDP and price level.How is recession illustrated in an AD/AS model?In the above figure; when the economy is in a longr run equabrium, the price level will be 90 . 110. 120, 100
- Using AD-AS analysis show graphically and explain the effect on the equilibrium level of price and income if: Increase in productivity of labour after attending the intensive course from their company. National per capita income has increased from RM40,713 in 2018 to RM42,777 in 2019. Dear experts, please explain me each of it seperately with full explanation so I could understand it better. Thanks in advadnce.The table below shows information on aggregate supply, aggregate demand and the price level for the imaginary country of Xurbia. Price Level AD AS 110 700 600 120 690 640 130 680 680 140 670 720 150 660 740 160 650 760 170 640 770 Plot the AD/AS diagram from the data shown (Don't have to show graph but do draw it to help you answer the questions). a. Identify the equilibrium. b. Imagine that as a result of a government tax cut, aggregate demand becomes higher by 50 at every price level. Identify the new equilibrium. c. How will the new equilibrium alter output? How will it alter the price level? What do you think will happen to employment?In 2013, Prussia's aggregate demand curve was determined by the equation M + 1-4% A change in aggregate demand means that in 2014, Prussia's aggregate demand curve was determined by the equation Using this information, draw Prussia's old and new dynamic aggregate demand curves on the graph Which of the factors could have resulted in the change irn aggregate demand seen between 2013 and 2014? 13 AD 2013 an improvement in technology O an increase in imports O higher consumer confidence O a decrease in oil prices 12 AD 2014 10 8 5 4 3 2 4 -3 2 1 0 1 2 3 4 5 6 78 9 10 Real GDP growth rate