PRINCIPLES OF MACROECONOMICS(LOOSELEAF)
7th Edition
ISBN: 9781260110920
Author: Frank
Publisher: MCG
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Question
Chapter 13, Problem 9P
(a)
To determine
Find the short-run equilibrium output of the economy described in problem 7 with zero net export.
(b)
To determine
Find the short-run equilibrium output of the economy when the net export rises to 100.
(c)
To determine
Find the short-run equilibrium output of the economy when the net export reduces to -100.
(d)
To determine
Explain the tendency of recessions and expansions to spread across countries using the findings.
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Students have asked these similar questions
The economy of Ashville is currently in a macroeconomic equilibrium, as depicted by point E, in
the accompanying figure.
The main component of Ashville's exports consist of the raw materials that it derives from its
natural resources.
Suppose that the world demand for raw materials decreases sharply, resulting in a decrease in
the price of raw materials throughout the world.
The decrease in the world demand for raw materials, which is the major source of Ashville's
exports, will
the level of aggregate demand in Ashville, causing a
▼shift in
the AD curve.
The decrease in the world demand for raw materials, which implies a decrease in the level of
factor prices, leads to
in the unit cost of production in Ashville, causing a
7 shift in the AS curve.
Use the three-point curve drawing tool twice to draw and label new AS and AD curves that
shows the effect of this shock on Ashville's economy.
Carefully follow the instructions above, and only draw the required object.
The overall effect of…
The graph below is associated with a hypothetical country. Consider a decrease in aggregate demand (AD). Specifically, aggregate demand shifts to
the left from AD₁ to AD2, causing the quantity of output demanded to fall at each price level. For instance, at a price level of 140, output is now
$200 billion, where initially it was $300 billion.
PRICE LEVEL
170
160
150
140
130
120
110
100
90
0
100
+-+
I I
200 300 400 500
OUTPUT (Billions of dollars)
AD1
AD2
600
700
800
?
3. Why the aggregate demand curve slopes downward
The following graph shows the aggregate demand (AD) curve in a hypothetical economy. At point A, the price level is 120, and the quantity of output
demanded is $500 billion. Moving up along the aggregate demand curve from point A to point B, the price level rises to 140, and the quantity of
output demanded falls to $300 billion.
170
180
150
B
140
130
A
120
110
AD
100
90
100
200
300
400
500
600
700
800
REAL GDP (Billions of dollars)
PRICE LEVEL
Chapter 13 Solutions
PRINCIPLES OF MACROECONOMICS(LOOSELEAF)
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