You are given the following equations for the Aggregate Demand
(AD) and short-run Aggregate Supply (SAS),...
You are given the following equations for the Aggregate Demand
(AD) and short-run Aggregate Supply (SAS), AD Y = 2 Ap + 4 (Ms / P)
SAS Y = 750 + 250 P Y N = 1250 Natural Real GDP Ap = 250 Autonomous
Spending Ms = 125 Nominal Money Supply
1- Find the equilibrium Price level and Real GDP in the short
run.
2- Determine the recessionary or inflationary gap if exist and
by how much at short run...
A. Aggregate Demand, Aggregate Supply, and
Equilibrium
For a hypothetical economy, the aggregate-demand
(AD), short-run aggregate...
A. Aggregate Demand, Aggregate Supply, and
Equilibrium
For a hypothetical economy, the aggregate-demand
(AD), short-run aggregate supply
(AS), and long-run aggregate-supply
(ASLR) schedules are as follows. The
schedules show the GDP price deflator (P) versus
real GDP (Q), with Q measured in
billions of constant dollars.
P
AD
AS
ASLR
80
30
22
30
90
28
24
30
100
26
26
30
110
24
28
30
120
22
30
30
130
20
32
30
A1. GRAPHS: Graph the AD,
AS,...
The aggregate-demand (AD), short-run aggregate supply (AS), and
long-run aggregate-supply (ASLR) schedules for a given
economy...
The aggregate-demand (AD), short-run aggregate supply (AS), and
long-run aggregate-supply (ASLR) schedules for a given
economy are as follows. The schedules show the GDP price index (P)
versus real GDP (Q), with Q measured in trillions of constant
(real) dollars. Note that ASLR is potential output
(Qf).
P
AD
AS
ASLR
60
7
1
3
90
6
2
3
120
5
3
3
140
4
4
3
160
3
5
3
170
2
6
3
1. Graph the AD, AS,...
Explain how the following changes in aggregate demand
or short-run aggregate supply, other things held unchanged,...
Explain how the following changes in aggregate demand
or short-run aggregate supply, other things held unchanged, are
likely to affect the level of total output and the price level in
the short run.
to. An increase in aggregate demand
b. A decrease in aggregate demand
c. An increase in short-run aggregate supply
d. A reduction in short-run aggregate supply
Price Level Aggregate Demand Short-Run Aggregate Supply 120
8,250 9,700 115 8,300 9,750 110 8,400 9,700...
Price Level Aggregate Demand Short-Run Aggregate Supply 120
8,250 9,700 115 8,300 9,750 110 8,400 9,700 105 8,500 9,600 100
8,600 9,500 95 8,700 9,300 90 8,800 8,800 85 8,900 8,000 80 9,100
7,000
Return to the original values of aggregate demand and short-run
aggregate supply. Assume potential GDP decreases to 7,000. Graph
the aggregate demand curve, short-run aggregate supply, and the new
potential GDP. Be sure to describe where the economy is operating
in the short-run relative to where...
Using aggregate demand and aggregate supply, explain what
happens in the short run if the Federal...
Using aggregate demand and aggregate supply, explain what
happens in the short run if the Federal Reserve raises interest
rates in the economy. Be sure to detail what happens to aggregate
demand, the price level, the level of GDP, and unemployment.