Consider an economy that is currently experiencing a recessionary output gap. As the economy adjusts back towards full employment, we expect the wage rate to Question 9Answer a. decrease, shifting the aggregate demand curve downward. b. decrease, shifting the aggregate supply curve downward. c. increase, shifting the aggregate supply curve upward. d. increase, shifting the aggregate demand curve upward. e. decrease, increasing potential GDP.

Assume an economy operates in the intermediaterange of its aggregate supply curve. State thedirection of shift for the aggregate demandor aggregate supply curve for each of thefollowing changes in conditions. What is theeffect on the price level? On real GDP? Onemployment?a. The price of crude oil rises significantly.b. Spending on national defense doubles.c. The costs of imported goods increase.d. An improvement in technology raises laborproductivity.

Suppose that a decrease in the demand for goods and services pushes the economy into arecession. In your own words, explain what happens to the price level and real GDP? Explainhow the economy will eventually get back to the potential output?

a.  What are the short-run equilibrium real GDP and price level in 2019?b.  What is the long-run equilibrium real GDP?c. Is the short-run macroeconomic equilibrium a full-employment equilibrium, belowfull-employment equilibrium, or above full-employment equilibrium?d. In transition to the long run, how would the wages in this economy change?e.  Following from d, explain how would the short run supply curve move to its long runposition, as the changes in the nominal wages take effect.f.  What will the long run price level be?

What effects would each of the following have on aggregate demand or aggregate supply? In each case use a diagram to show the expected effects on the equilibrium price level and the level of real output. Assume all other things remain constant.a. A widespread fear of depression on the part of consumers.b. A $2 increase in the excise tax on a pack of cigarettes.c. A reduction in interest rates at each price level.d. A major increase in Federal spending for health care.e. The expectation of rapid inflation.f. The complete disintegration of OPEC, causing oil prices to fall by one-half.g. A 10 percent reduction in personal income tax rates.h. A sizable increase in labor productivity (with no change in nominal wages).i. A 12 percent increase in nominal wages (with no change in productivity).j. Depreciation in the international value of the dollar.

c. If aggregate demand shifts right, what is equilibrium output? d. if aggregate demand shifts left, what is equilibrium output?

Which of the following will NOT shift the ADTT curve? O a. A rise in consumer confidence O b. A rise in interest rates O c. A rise in government spending O d. A rise in exports

R T 3. Price level B K SAS 1 SASO Real output C. an increase in aggregate demand. D. a decrease in aggregate demand. IUO Refer to the graph shown. A movement from A to C is most likely to be caused by: A. an increase in input prices. B. a decrease in input prices. NG

If the price level rises and the money wage rate remains constant, what happens to the quantity of real GDP supplied?   How does the economy move? If the price level rises and the money wage rate remains constant, the quantity of real GDP supplied _______ and there is a movement up along the _______.     A. increases; aggregate supply curve   B. increases; potential GDP line   C. does not change; aggregate supply curve   D. does not change; potential GDP line

If the price level rises and the money wage rate remains constant, what happens to the quantity of real GDP supplied?   How does the economy move? If the price level rises and the money wage rate remains constant, the quantity of real GDP supplied _______ and there is a movement up along the _______.     A. increases; aggregate supply curve   B. increases; potential GDP line   C. does not change; aggregate supply curve   D. does not change; potential GDP line Thanks!!