How do the aggregate price level and aggregate output change

Assignment Help Macroeconomics
Reference no: EM133227243

Question: The economy is in long-run macroeconomic equilibrium. Suppose that there is a temporary, but significant, increase in oil prices in an economy with an upward-sloping SRAS curve. Based on the situation, answer the following questions.

a. How do the aggregate price level and aggregate output change in the short run as a result of the oil shock? What is this phenomenon known as?

b. In this case, however, suppose that policymakers wish to prevent equilibrium real GDP from changing in response to the oil price increase. Should they increase or decrease the quantity of money in circulation? Why?

Reference no: EM133227243

Questions Cloud

Share your agency Falls Risk Assessment : Please share your agency's Falls Risk Assessment and Prevention strategy, explain how it is applied to the clients or resident's care plan
Draw a graph showing a production possibilities frontier : Draw a graph showing a production possibilities frontier for the goods "guns" and "butter". Label the graph. label or explain where efficient and inefficient
Discuss the model or theoretical framework : Discuss the model or theoretical framework used to assess the epidemiological, biostatistical, occupational, and environmental factors
Write down the equation of exchange : Write down the equation of exchange. Mention what each element in the equation stands for. Suppose the money growth rate in country Beta is 7%
How do the aggregate price level and aggregate output change : How do the aggregate price level and aggregate output change in the short run as a result of the oil shock? What is this phenomenon known as?
Why might this shift be larger than 800 million dollar : government of a country increases spending on roads and highways by 800 million dollar . Show graphically and explain why might this shift be larger
Discuss the link between economic development and capital : The vast majority of ideas about economic growth focus nearly solely on capital as the primary element contributing to development.
Discuss the barriers you will set up to deter the entry : Discuss the barriers you will set up to deter the entry of the firm. If the firm enters, it will take your customers and decrease the volume of XYZ revenue
Explain the effect of an increase investment in technology : Explain the effect of an increase investment in technology on economic growth? Explain significant differences in the impact of technology on economic growth

Reviews

Write a Review

Macroeconomics Questions & Answers

  What are the primary functions of the fed

The monetary system in any economy facilitates trade and allows people to trade more efficiently, as compared to a barter economy. What are the primary functions of the Fed? What role does the Federal Open Market Committee (FOMC) play in our economy

  Expert system as used in artificial intelligence

What is the definition or meaning of Expert System as used in Artificial Intelligence?

  Illustrate the price elasticity of demand at the equilibrium

Illustrate the price elasticity of demand at the equilibrium price and quantity.What is the price elasticity of supply at the equilibrium price and quantity.

  Critical task as a project manager

What do you believe is the most critical task as a project manager? What role should they play (a coordinator, a technical advisor, a consultant, a coach, a manager, a bridge between project team, upper manager and customers or a combination of al..

  Discuss the influence of any federal government

Discuss the influence of any Federal government or state government programs, such as tax credits or tax deductions for energy-saving/efficiency purchases.

  Program to increase the availability of food

For this statement to be true, identify what the elasticity of supply would have to be and explain why. In addition, predict what the elasticity of supply would have to be for a food stamp program to increase the availability of food to the poor w..

  What is the allowance for sampling risk

You are an auditor on an engagement. You examine a sample of a 100 items and find five deviations. You calculate an upper deviation of 9.1 percent. What is the allowance for sampling risk?

  Billion people will be living on earth

It is estimated that by the year 2050, more than 9 billion people will be living on Earth. This is due in part to a variety of factors, including economic, social, and cultural reasons. Developed Nations (DN) and Less-Developed Nations

  Aggregate demand plot

Derive the IS curve in the (Y, i) space using the aggregate demand plot in the (Y, AD) space.

  Determine the price elasticity of demand for a resource

Determine the price elasticity of demand for a resource. Why is it important and what is it used for.

  Define the price elasticity of demand

Define the price elasticity of demand and discuss its relationship to revenue? Suppose that government would like to maximize tax revenue. Explain why it may be a good idea for the government to lower tax rates for the goods that have very high pri..

  What is impact on wealth of nations from import restrictions

Discuss how to use Big Macs to compare productivity between two different countries. Explain how the McWage is calculated and what it means.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd