Describing potential gdp with diagrams

Assignment Help Macroeconomics

Reference no: EM1311467

1. Consider an economy that is above full-employment equilibrium (natural rate of output) due to an increase in AD. Prices of productive resources have not changed. With the help of a graph, discuss how the economy returns to long-run equilibrium, with no government intervention.

2. Consider an economy where economists have estimated that last year's real GDP was $800 billion, equal to potential GDP. The price level was 105. Suppose that this year the economist estimate that potential GDP has increased by 10 percent. However, actual real GDP has decreased by 5 percent, while the price level has also decreased by 5 percent. Draw an AD-AS graph that shows last year's equilibrium, as well as last year's demand, aggregate supply (short-run and long-run), price level, and real GDP level. Next, given the information above, show what has happened to the price level and the level of real GDP this year( show this year's equilibrium), plus what has happened to aggregate demand, short-run aggregate supply, and long-run aggregate supply since last year.

Reference no: EM1311467

Questions Cloud

Determining the correlation coefficient and regression lines : Make a scatter plot, illustrate the regression lines. Determine the correlation coefficient between husband’s and wife’s education for couples in which wife is employed full time?

What is the apparent weight of a 94 kg astronaut : An insulated Thermos contains 210 cm3 of hot coffee at 88 °C. You put a 19.00 g ice cube at its melting point to cool the coffee. By how many degrees has the coffee cooled once the ice has melted and equilibrium is reached? Treat the coffee as though..

Evaluate the company''s contribution margin : Evaluate the company's contribution margin (CM) ratio and Estimate the change in the company's net operating income if it were to increase its total sales by $1,000.

Probabilities of a random experiment : A certain random experiment can result in one of four different possible outcomes, which we'll call A, B, C and D.

Describing potential gdp with diagrams : Consider economy that is above full-employment equilibrium (natural rate of output) because of an increase in AD. Prices of productive resources have'nt changed. With the help of graph

What is the scale reading while an elevator accelerates : A solid cylinder with mass and radius, rotating with angular speed about an axis throughout its center, is set on the horizontal surface for which the kinetic friction coefficient is.

Prepare a new contribution format income statement : Prepare a new contribution format income statement under each of the following conditions - the sales volume increases by 100 units.

Computation of value of the bond and the total interest : Computation of value of the bond and What is the total interest expense recorded on these bonds over the fifteen years if the market rate of interest

Computing probability of debt for randomly selected borrower : Compute the probability that debt for a randomly selected borrower with good credit is more than $18,000?

User Account

All Pages