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Need some help with these questions, thanks! In the short run, the decrease in foreign spending on domestic goods associated with the recession abroad shifts
Need some help with these questions, thanks!
In the short run, the decrease in foreign spending on domestic goods associated with the recession abroad shifts tire V curve to the V , causing the price level to V the price level people expected and the quantity of output to V potential output. The economic turmoil abroad will cause the unemployment rate to V the natural rate of unemployment in the short run. Again, the following graph shows the economy in longrun equilibrium at the expected price level of 5 and potential output of $5 trillion before the decrease in foreign spending on domestic goods associated with the recession abroad. Now, on the following exhibit, show the longrun impact of the economic turmoil abroad by shifting both the shortrun aggregate demand (AD) curve and the shortrun aggregate supply (ERAS) curve to the appropriate positions. Assume that the economic turmoil abroad does not cause a change in the economy's resources, technology, or productivity.) Note: You will not be graded on any changes you make to the graph. LRAS 1o _0_ AD 8 SRAS |:| u a SRAS LU I> El - - - - - - - - + E E 4 2 u o 2 4 6 a 1:] REAL GDP (Trillions of dollars} During the transition from the short run to the long run, price level expectations will V , and the v curve will shift to the V . In the long run, as a result of the economic turmoil abroad, the price level V , the quantity of output v potential output, and the unemployment rate V the natural rate of unemployment. Consider the dynamic aggregate demand and aggregate supply diagram for a hypothetical economy. Between 2031 and 2032, the aggregate demand curve (AD) shifts from AD] to A192, the shortrun aggregate supply curve (SEAS) shifts from SRA31 to SRASg, and the longrun aggregate supply curve {LRAS} shifts from LRASL to LRASg. \\ 11D PRJCE IJEVEL (CPI) 8 6.6 6.8 REAL GDP (I'l'illions of dollars} The ination rate between 2031 and 2032 is V . The growth rate of fullemployment output between 2031 and 2032 is V . Which of the following best explains the economic developments from 2031 to 2032? O The economy operated at fullemployment output in 2031, but the subsequent increase in aggregate demand was not enough to restore the economy to fullemployment output, leading to a recessionary gap in 2032. O The economy experienced costpush ination. O A strong increase in aggregate demand allowed the economy to grow out of a recessionary gap in 2031 to full employment in 2032. which of the following are possible reasons for the rightward shift of the LRAS curve between 2031 and 2032? Check all that apply. D An increase in government purchases D An improvement in ted'inology D An increase in the size of the labor forceStep by Step Solution
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