PRICE LEVEL (Billions of dollars) 200 160 120 80 40 0 20 40 REAL GDP (Index numbers) The equilibrium price level is I 60 80 100 The change in government spending the multiplier effect. o Initial AD AS New AD and the equilibrium level of real output is ? Suppose that the government spending increases by $4 billion and the expenditure multiplier in this economy is 5. On the previous graph, use the purple points (diamond symbol) to illustrate the effect of the increase in government spending on the aggregate demand (New AD) curve. the equilibrium level of real output by . The price level increase

PRICE LEVEL (Billions of dollars) 200 160 120 80 40 0 20 40 REAL GDP (Index numbers) The equilibrium price level is I 60 80 100 The change in government spending the multiplier effect. o Initial AD AS New AD and the equilibrium level of real output is ? Suppose that the government spending increases by $4 billion and the expenditure multiplier in this economy is 5. On the previous graph, use the purple points (diamond symbol) to illustrate the effect of the increase in government spending on the aggregate demand (New AD) curve. the equilibrium level of real output by . The price level increase

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter8: Aggregate Demand And Aggregate Supply

Section: Chapter Questions

Problem 1WNG

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Note: Line segments will automatically connect the points. PRICE LEVEL (Billions of dollars) 200 160 120 0 80 160 240 REAL GDP (Index numbers) The equilibrium price level is 320 400 Initial AD The change in government spending the multiplier effect. SRAS New AD ✓, and the equilibrium level of real output is Suppose that the government spending increases by $16 billion and the expenditure multiplier in this economy is 5. On the previous graph, use the purple points (diamond symbols) to illustrate the effect of the increase in government spending on the aggregate demand (New AD) curve. the equilibrium level of real output by . The price level increase
The following graph shows the aggregate demand (AD) curve in a hypothetical economy. At point A, the price level is 140, and the quantity of output demanded is $300 billion. Moving down along the aggregate demand curve from point A to point B, the price level falls to 120, and the quantity of output demanded rises to $500 billion. 170 A O PRICE LEVEL 160 150 140 120 110 100 B AD C
Price Level Aggregate Supply Aggregate Demand 90 3,000 3,500 95 3,000 3,000 100 3,000 2,500 105 3,000 2,200 110 3,000 2,100 Table 1. Sketch an aggregate supply and aggregate demand diagram. What is the equilibrium output and price level? If aggregate demand shifts right, what is equilibrium output? If aggregate demand shifts left, what is equilibrium output? In this scenario, would you suggest using aggregate demand to alter the level of output or to control any inflationary increases in the price level?
2. Equilibrium The following table shows the real output demanded and supplied at various price levels in a hypothetical economy. Real Output Demanded Price Level Real Output Supplied (Billions of dollars) (Billions of dollars) (Index number) (Billions of dollars) 10 160 85 20 120 80 30 80 70 50 40 50 80 20 20
Connect assignment O es Use the following information to draw aggregate demand (AD) and aggregate supply (AS) curves on the following graph. Output Demanded (Aggregate Demand) Output Supplied (Aggregate Demand) Price Level 600 100 Price Level (average price) Instructions: Use the tools provided 'AD' and 'AS' to plot the aggregate demand (AD) and aggregate supply (AS) curves. Plot only the endpoints of each line (plot 2 points for each line-4 points total). Both curves are assumed to be straight lines. 900 800 700 600 500 400 300 200 100 0 0 $700 100 Aggregate Supply and Demand 200 $800 100 900 900 900 900 90 900 900 700 Real Output (quantity per year) Instructions: Enter your response as a whole number. a. What is the equilibrium price level? $ Tools AD D AS e b. What curve (AD or AS) would have shifted if a new equilibrium were to occur at an output level of 600 and a price level of $600? O AS would have shifted to the right. O AS would have shifted to the left. O AD would have…
The accompanying table shows the aggregate demand and aggregate supply schedules for a hypothetical economy. Real Domestic Output Supplied (in Billions) $9,000 Price Level (Index Value) Real Domestic Output Demanded (in Billions) $3,000 4,000 5,000 350 8,000 5,000 7,000 300 250 6,000 200 7,000 150 5,000 8,000 100 4,000 a. What is the equilibrium price and output levels? b. If the price level is 350, what will happen in the economy? why? (.
In the Graph, what is the equilibrium level of real GDP and equilibrium price? S 120 110 100 S 5,000 6,000 7,500 Real GDP (billions of dollars per year) $5,000 billion real GDP and price level of 120 $5,000 billion real GDP and price level of 110 $6,000 billion real GDP and price level of 110 $7,500 billion real GDP and price level of 100 O O O O Price Level
The following graph shows the aggregate demand curve. Shift the aggregate demand curve on the graph to show the impact of a tax cut. (? 130 120 Aggregate Demand 110 100 90 Aggregate Demand 80 70 10 20 30 40 50 60 OUTPUT PRICE LEVEL
What are the factors other than price that can shift aggregate demand curve interms of investment and consumption? Also explain graphically.
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 140, and the quantity of output demanded is $300 billion. Moving down along the aggregate demand curve from point A to point B, the price level falls to 120, and the quantity of output demanded rises to $500 billion. O PRICE LEVEL 170 100 150 140 130 120 110 100+ 8 90 0 100 B 200 300 400 500 OUTPUT (Billions of dollars) AD 600 700 800
10. Market equilibrium and disequilibrium The following graph shows the monthly demand and supply curves in the market for calendars. Use the graph input tool to help you answer the following questions. Enter an amount into the Price field to see the quantity demanded and quantity supplied at that price. You will not be scored on any changes you make to this graph. Graph Input Tool Market for Calendars 80 12 I Price (Dollars per calendar) 24 64 Supply 56 Quantity Demanded (Calendars) Quantity Supplied (Calendars) 500 48 40 32 Demand 50 100 150 200 250 300 350 400 450 500 QUANTITY (Calendars) PRICE (Dollars per calendar)
The following graph shows the aggregate demand (AD) curve in a hypothetical economy. At point A, the price level is 140, and the quantity of output demanded is $300 billion. Moving down along the aggregate demand curve from point A to point B, the price level falls to 120, and the quantity of output demanded rises to $500 billion. 170 160 150 A 140 130 B 120 110 AD 100 90 100 200 300 400 500 600 700 800 OUTPUT (Billions of dollars) As the price level falls, the cost of borrowing money will causing the quantity of output demanded to This phenomenon is known as the effect. Additionally, as the price level falls, the impact on the domestic interest rate will cause the real value of the dollar to in foreign exchange markets. The number of domestic products purchased by foreigners (exports) will therefore and the number of foreign products purchased by domestic consumers and firms (imports) will Net exports will therefore causing the quantity of domestic output demanded to . This phenomenon…