In the COMPLEX AD/AS model assume actual real GDP is $19.2 trillion, the price level (GDP Deflator) is 185 and potential real GDP is $19.7 trillion. A year later technology increases, oil prices fall, and the interest rate decreases. However, the technology "shock" will be LESS than the oil price & interest rate "shocks," but the interest rate "shock" is LESS than the oil price "shock". As a result, the price level actual real GDP
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- What impact would a decrease in the size of the labor force have on GDP and the puce level according to the AD/AS model?Which of the following is a major difference between the AD-AS model and the dynamic AD-AS model? The dynamic AD-AS model assumes OA. AD only includes consumption, investment, and government purchases, while the AD-AS model assumes AD includes consumption, investment, government purchases and net exports. B. the SRAS is stable and will not shift, while the AD-AS model assumes the SRAS can only change with an exogenous event such as oil price changes. OC. the economy does not experience long-run growth, while the AD-AS model assumes there is constant inflation in the economy. OD. potential GDP increases continually, while the AD-AS model assumes the LRAS does not change.1 1A) Using the static AD/AS model to explain how the job keeper (wage subsidy) policy worked to sustain the economy even though unemployment rate in Australia had increased during Covid-19 period? 1B) justify in detail the difference between U shaped recoveries and V shaped recoveries?
- Y5 Consider an AS-AD model for the U.S. Suppose an economic expansion in Mexico increases income for the average Mexican household. Mexico is a large trading partner with the US. This expansion would cause: a. the U.S. price level to rise and real GDP to fall. b. the U.S. price level and real GDP to increase. c. the U.S. price level to fall and real GDP to rise. d. the U.S. price level and real GDP to fall.6.1.What is an AD-AS model and what does such a model as per the givendiagram essentially focus on?6.2.Discuss the diagram in detail by first explaining what leads to step Step 1(representing a shift in curves on the diagram) and indicating what occursto cause shifts in some of the curves. Then discuss Step 2 (whichrepresents other macroeconomic changes) and indicate what happens toother variables when there are shifts in some of the curves as per Step 1. 6.3.What, in general, do the points of intersection between the AS and AS2curves and the AD curve show?6.4.When the LAS curve moves to the right to LRAS2, what exactly do thepoints of intersection between the AS and AS curves and the AD1 curve,indicated as point 1 and point 2, reflect on the diagram?Graphically show the likely short-run impact on US real GDP and aggregate price level using the AD/AS model. Explain your prediction. Which curve in the AD/AS model would a change in US consumer consumption affect? Note:- Please avoid using ChatGPT and refrain from providing handwritten solutions; otherwise, I will definitely give a downvote. Also, be mindful of plagiarism. Answer completely and accurate answer. Rest assured, you will receive an upvote if the answer is accurate.
- Price Level LRAS AS/AD Model SRAS AD Which of the following statements is true based on this graph? c.) The economy is fully employed. a.) Producers are using resources faster than they're being replaced. Y= RGDP b.) The economy is producing at a real GDP less than the LRAS. d.) On the business cycle, this graph would be near a peak.Now assume that the contraction in the Singaporean economy is mainly driven by supply side factors, Show the short-run effects of this using the AD-AS model. Carefully explain in wordsSuppose, initially the Australian economy is atfull employment(in other words the economy is atthe potentialGDP). Using AD-AS model, explain how would each of the following events aectthe economy both in theimmediate and in the long term.a) A slowdown in China’s economic growth due to the sub-prime crisis in the US.b) Union wage settlements push the wage rate up.c) An increase in consumer confidence.
- 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.Which of the following would shift the SRAS curve to the right (ignoring any potential effect on LRAS)? O The world price of oil increases rapidly without warning but is not expected to remain at the new high level permanently. However, in the short run, it is more costly for all firms to produce goods and services. The government introduces a set of new regulations that make it more costly for firms to produce and sell goods and services. These regulations are expected to be permanent. O The interest rate decreases, spurring investment spending. There is an increase in government spending. O There is a technological improvement that allows firms to reduce their costs of production permanently. The following graph shows the short-run aggregate supply (SRAS) curve and the long-run aggregate supply (LRAS) curve for an economy. Suppose the world price of oil decreases rapidly without warning but is not expected to remain at the new low level permanently. However, in the short run, it is…True or False Explain why, Use basic AD/ AS model Suppose that there is a decline in velocity (that is, money demand decreases). This would cause the price level and income to fall in both the short run and long run