Question

43)When the aggregate demand curve and the short-run aggregate supply curve intersect, Select one: a. The...

43)When the aggregate demand curve and the short-run aggregate supply curve intersect,

Select one:

a. The long-run aggregate supply curve must also intersect at the same point.

b. Inflation must be increasing.

c. Structural and frictional unemployment equal zero.

d. The economy is in short-run macroeconomic equilibrium.

Homework Answers

Answer #1

Equilibrium means the balance between the supply curve and the demand curve. Equilibrium at both microeconomic and macroeconomic levels is given by the intersection of the supply and the demand curve.

On the macroeconomic level, short-run equilibrium occurs at the intersection of the aggregate demand curve and the short-run aggregate supply curve. At the short-run equilibrium point, price and real output are determined.

Long-run equilibrium occurs at the intersection of the aggregate demand curve and the long-run aggregate supply curve. Structural and frictional unemployment equals zero in the long-run equilibrium at the natural rate of unemployment.

It is not necessary that the long-run aggregate supply curve must also intersect at the same point as short-run equilibrium point.

The answer is (D) The economy is in short-run macroeconomic equilibrium.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
11.   Demand-pull inflation occurs when the aggregate __________ curve shifts _______. A.   demand, right B.    demand, left C.    supply, right...
11.   Demand-pull inflation occurs when the aggregate __________ curve shifts _______. A.   demand, right B.    demand, left C.    supply, right D.   supply, left 12.   When the aggregate price level decreases, the resulting decrease in interest rates will most likely ___________ investment and _____________ consumption. A.   increase, increase B.    increase, decrease C.    decrease, increase D.   decrease, decrease 13.   The economy is operating at full capacity.  The long-run aggregate supply curve is __________.  In the long run, an increase in the aggregate price level will __________ output. A.   horizontal, increase B.    horizontal, not change C.    vertical, increase D.   vertical,...
Draw a basic short run aggregate supply (SRAS), aggregate demand (AD) and long-run aggregate supply curve...
Draw a basic short run aggregate supply (SRAS), aggregate demand (AD) and long-run aggregate supply curve (LRAS) that shows the economy in long-run equilibrium.
Long-run aggregate supply is equal to 1. short-run aggregate demand. 2. short-run aggregate supply 3. inflation...
Long-run aggregate supply is equal to 1. short-run aggregate demand. 2. short-run aggregate supply 3. inflation minus unemployment. 4. potential output.
with the use of Aggregate demand and the short run and long run aggregate supply curve,...
with the use of Aggregate demand and the short run and long run aggregate supply curve, explain and illustrate how policy marker can use fiscal policy to get the economy out of recession and stop inflation.
Suppose the aggregate demand and the short-run aggregate supply of a country INCREASES. a) Starting from...
Suppose the aggregate demand and the short-run aggregate supply of a country INCREASES. a) Starting from a long-run equilibrium, use an AD-AS diagram illustrate the effects of these two changes. Label the initial long-run equilibrium as point A and the resulting short-run equilibrium as point B. b) Suppose policymakers adopt contractionary macroeconomic policies to restore the long run equilibrium. On the same diagram from part a, show the resulting impact on AD or AS curve and label the new long-run...
consider the macroeconomic AD-AS model with an aggregate demand curve and a short-run aggregate supply curve....
consider the macroeconomic AD-AS model with an aggregate demand curve and a short-run aggregate supply curve. assume that changes in national output also represent changes in real GDP. a. use the AD-AS model to explain and illustrates the differences between demand-side measures and supply-side measures and give an example of each. you also need to mention which markets are embedded within each curve. b. use the AD-AS model to analyse and illustrate the short run impact of an increase in...
The Long-Run Aggregate Supply (LRAS) curve reflects the natural level of output when there is no...
The Long-Run Aggregate Supply (LRAS) curve reflects the natural level of output when there is no frictional unemployment the level of output that will prevail in the long run as determined by the production function and factors of production the level of output that will prevail in the long run as determined by the quantity equation the level of output in the long run when the money supply is constant The Short-Run Aggregate Supply (SRAS) curve reflects the natural level...
Yp is what on the aggregate demand and supply graph? A) where aggregate demand equals short...
Yp is what on the aggregate demand and supply graph? A) where aggregate demand equals short run aggregate supply B) real GDP when there is zero inflation C) real GDP when there is zero unemployment D) the real GDP when the economy is at full employment
The long-run aggregate supply curve represents the level of output possible if the economy: Multiple Choice...
The long-run aggregate supply curve represents the level of output possible if the economy: Multiple Choice is operating at full capacity. has a zero inflation rate. is operating at an unemployment rate of zero. has no structural unemployment.
When aggregate demand shifts left along the short-run aggregate supply curve, a. unemployment and prices fall....
When aggregate demand shifts left along the short-run aggregate supply curve, a. unemployment and prices fall. b. unemployment and prices rise. c. unemployment falls and prices rise. d. unemployment rises and prices fall.
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT