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Read more about the curve shifts of this and learn the AD-AS model through an example. Our experts can answer your tough homework and study a question Ask a question. C) Based on your answer in part (b), what is the impact of higher exports on real wages in the short-run? On your graph in part (a), show the effect of this reduction in government spending. C) Based on your answer in part (b), what is the impact of the reduction in government spending on people who have a fixed income? Assume the economy of andersonland school. So this is the short-run Phillips curve, which is downward sloping. But here they're talking about aggregate supply. That's just the full employment output for our country. Assume the U. economy was operating at a short-run equilibrium when interest rates for investment loans increased. A copy of the textbook that you will be using, school calendar.
All right, let me draw that. So remember, Phillips curves show the relationship or the theoretical relationship between the unemployment rate and the inflation rate. Understand the aggregate demand-aggregate supply model and its features. Assume that the economy of Country X has an actual unemployment rate of 7%, a natural rate of unemployment of 5%, and an inflation rate of 3%. Assume the economy of anderson land. In the long run, which of the following shift to the right, shift to the left, or remain the same? It'll just be a vertical line. B) Assume the Brazilian government has decreased spending by 50%.
We will balance covering some of the more challenging topics in the course material while trying some strategies and lessons to develop students' skills in economic analysis. The economy would never be able to re-bound without government or central bank intervention unless producers begin to purchase more labor during the recessionary part of the cycle. That interest rate then lowers the investment demand. Let me draw it like that. 4 - 4. Assume the economy of Andersonland is in a long-run equilibrium with full employment. In the short run, nominal wages are fixed. a) Draw a | Course Hero. So here it's kinda tricky 'cause you might be thinking they're asking about what you just drew. Currency X's currency for exchange will go up. Answer - One point is earned for stating that real wages will fall because the price level has increased and the nominal wages are fixed in the short run.
I) What component of aggregate demand will change? Let's call that Y sub one, and we are at price level sub one. And then if a lot of people are unemployed, they might be willing to work for less or they might have less money in their pocket with which to drive up the prices, and so you will have this inverse relationship right over here. Why does AS in short run shift to the right when there's high unemployment in an economy? Now we want to graph the short-run and long-run Phillips curves. Instructor] In this video, I want to tackle an entire AP macroeconomics free response exercise with you. This preview shows page 1 - 2 out of 2 pages. Assume the economy of andersonland is in a long-run equilibrium. That would be upward sloping, as the price level increases or the economy might be willing to output more, so that's short-run aggregate supply. Instructor: Julie Meek. Or for a given amount of output, it might cost less because there's just people out there competing for that work. And the thing to appreciate is the long-run Phillips curve or the long-run aggregate supply curve, these don't change unless something structurally changes in the economy, unless the economy changes in some very fundamental way, maybe a change in education levels, change in population, or change in technology. So I could call that our long-run Phillips curve, and it's going to be right there at 5%.
So one way to think about it, at a given price level, because there's people out there looking for a job, you might be able to get more output. So this is real GDP right over here, G-D-P. Now you're just going to have a long-run supply curve which is vertical. 520. class will eventually label you as a good cue er and easy to follow This skill. And this would be in relation to lowering taxes or raising taxes or increasing or decreasing government spending. 31 Annual Report 2018 19 C REMUNERATION TO KEY MANAGERIAL PERSONNEL OTHER THAN. And then you have the equilibrium output, let's call that Y sub one. And if we're talking about the price of a currency and we say it's going down, we would say that that currency is depreciating, so it would depreciate, and we're done. Participants will be given guidance in development of a class syllabus as well as a review of the most recent exam.
So our short-run aggregate supply would look like that. The goal is for each participant to leave the summer institute better prepared to teach AP Macroeconomics. If the demand for it stays constant, but you increase the supply, and that's what we just talked about in part (e), well, then the price is going to go down. And so you would have your short-run aggregate supply curve shift to the right, short-run aggregate supply sub two. So our unemployment rate right over here is 7%, and our inflation rate right over here is 3%.
This video walks you through the concepts covered on an AP Macroeconomics Free Response Question. And notice, our equilibrium point right over here, let me call that aggregate demand right over here. Ii) What is the impact on the Long-run aggregate supply? Draw a correctly labeled graph of aggregate demand and short-run aggregate supply, and show the impact on the equilibrium price level and real GDP of the fiscal policy action identified in part (c).
I) Equilibrium output, labeled Y1. Well, if we want to reduce the unemployment rate, one way to do the that would be to shift aggregate demand to the right. Question: The economy of Brazil is in long-run equilibrium with full employment. 3D Audio Content Deep Sen Qualcomm presented m27347 Description of Qualcomms HoA. Try it nowCreate an account. So I'm gonna do the inflation rate in the vertical axis which is typical. If you said hey, we would change the federal funds rate or we would increase the money supply or decrease the money supply, those would be monetary actions. Answer - One point is earned for stating that the long-run aggregate supply curve will shift to the right because the capital stock has increased. I drew it to the left of the full employment output because we are dealing with a recession here. But what about the short-run aggregate supply curve? And they say the short-run equilibrium we have an unemployment rate of 7% and an inflation rate of 3%.
And now if you have a tax cut, that would shift aggregate demand to the right. And there's a couple of ways to think about that. If price levels are low, people might not be willing to output a lot, and if price levels are high, people will output more. And to buy imports, they would have to increase the supply of their currency in exchange markets because they want to convert it into foreign currencies to buy those imports, and so this will increase. If you have low rate of unemployment, especially if it's below your natural rate of unemployment, well then there's a lot of demand for people. In the above figure, E1 is the long-run equilibrium... See full answer below. And now we have a different equilibrium real GDP, so that is going to be Y sub two. Well, that's going to be upward sloping.
Answer - One point is earned for stating that the investment component of AD will change. Ii) Equilibrium price level, labeled PL1. I am looking forward to meeting you and working with you during our four days together. New container ships and equipment are increases in capital and therefore Investment will increase. AP®︎/College Macroeconomics.
She has developed pedagogical strategies for skill and knowledge acquisition to share with participants from her experience. We care about a fiscal policy action. At any given price level, people are gonna want more. As a grader of the AP Macroeconomics exam for the past 10 years and several years as a table leader, Julie has had the chance for exceptional professional development. During the capital inflow process, the rest of the world wants USD because they can only invest using US dollars inside the U. S. This increases thedemand for USD in the foreign exchange market and appreciates the value of USD in terms of other foreign currency. You would have more output at a given price level. And one way to do that, would be to put more money in people's pockets, and one way to do that, is to have a tax cut. Course Hero uses AI to attempt to automatically extract content from documents to surface to you and others so you can study better, e. g., in search results, to enrich docs, and more.
On your graph in part (a), show the effect of higher exports on the equilibrium in the short-run, labeling the new equilibrium output and price level Y2 and PL2, respectively.