Real economic variables and nominal economic variables

Assignment Help Business Economics
Reference no: EM13898608

Most economists believe that real economic variables and nominal economic variables behave independently of each other in the long run.

For example, an increase in the money supply, a--------------   variable, will cause the price level, a----------------------   variable, to increase but will have no long-run effect on the quantity of goods and services the economy can produce, a-----------------   variable. The notion that an increase in the quantity of money will impact the price level but not the output level is known as --------------------.

In the short run, however, most economists believe that real and nominal variables are intertwined. Economists use the model of aggregate demand and aggregate supply to examine the economy's short-run fluctuations around the long-run output level. The following graph shows an incomplete short-run aggregate demand (AD) and aggregate supply (AS) diagram—it needs appropriate labels for the axes and curves. You will identify some of the missing labels in the questions that follow.

The vertical axis of the aggregate demand and aggregate supply model measures the overall ---------------- .

The aggregate-----------------------   curve shows the quantity of goods and services that firms produce and sell at each price level.

Reference no: EM13898608

Questions Cloud

A market has many small firms and one dominant firm : A market has many small firms and one dominant firm. The market demand is Q = 100 - 5P. The dominant firm has a constant marginal cost of $6. All the smaller fringe firms combined have a supply curve given by Qs = 4P - 8.
Determine the tax issue : First determine the tax issue. Then research the issue and determine your conclusion.  Fred Fisher is a licensed scuba diver who lives in Key Largo. He is employed full-time as an engineer. Five years ago he had been employed as a professional diver ..
Economy in long-run equilibrium at the expected price level : The following graph shows the economy in long-run equilibrium at the expected price level of 120 and the natural rate of output of $600 billion. Suppose firms become pessimistic about future business conditions and cut back on investment spending.
Fed doubles growth rate of quantity of money in the economy : Suppose the Fed doubles the growth rate of the quantity of money in the economy. In the long run, the increase in money growth will change which of the following?
Real economic variables and nominal economic variables : Most economists believe that real economic variables and nominal economic variables behave independently of each other in the long run. For example, an increase in the money supply, a--------------   variable, will cause the price level, a-----------..
Most vocal political pressure for tariffs is generally made : The most vocal political pressure for tariffs is generally made by:
Problem encountered-implementing infant industry tariff : A problem encountered when implementing an "infant industry" tariff is that:
Calculate the effective rate of protection : Suppose that the production of $1 million worth of steel in Canada requires $100,000 worth of taconite. Canada’s nominal tariff rates for importing these goods are 20 percent for steel and 10 percent for taconite. Calculate the effective rate of prot..
Suffering from low-priced foreign competition : Imagine that you are a lobbyist for timber, an established industry suffering from low-priced foreign competition, and you are trying to get Congress to pass trade restrictions. Which two or three of the five arguments do you think would be most pers..

Reviews

Write a Review

 

Business Economics Questions & Answers

  How affirmative action is often presented in the media

Affirmative action is one of the most controversial topics in employment law. How affirmative action is often presented in the media? How similar is that portrait to the one presented in Johnson v. Transportation Agency, Santa Clara County ? When are..

  Examine who the winner and loser would be

Imagine that you have a fixed 30-year interest rate for your mortgage, and the economy has experienced unanticipated inflation.

  Label income also substitution effects for both goods

The consumption of both x1 also x2. Label income also substitution effects for both goods. Illustrate what is the implication of product differentiation in defining market structure.

  What will be amount of interest accumulated at the time

Emily Dorsey's current salary is $85,000 per year, and she is planning to retire 19 years from now. She anticipates that her annual salary will increase by $1,000 each year ($85,000 the first year, to $86,000 the second year, $87,000 the third year, ..

  Capitalistic foundations negatively affected working classes

Would you agree with Karl Marx in saying that the Industrial Revolution and its capitalistic foundations negatively affected the working classes?

  Assume the firm has typical u-shaped cost functions

Assume that a firm's only variable input is labor. When 50 workers are used, the average product of labor is 50 and the marginal product of labor is 75. The wage rate is $80 and the total cost of the fixed input is $500.

  Calculate the cost variance and schedule variance

Examine the following EVM data for the Acme project, a hypothetical construction project, to view information on the past and future performance: Calculate the cost variance (CV), schedule variance (SV), cost performance index (CPI), and schedule per..

  Fire engines is sole seller of fire engines in fictional

Sam's Fire Engines is the sole seller of fire engines in the fictional country of Pyrotania. Initially, Sam produced four fire engines, but he has decided to increase production to five fire engines. The following graph shows the demand curve Sam fac..

  In building the aggregate expenditures model

Which one of the following statements about discretionary fiscal policy is correct? A. Discretionary fiscal policy refers to any change in government spending or taxes that destabilizes the economy. B. Discretionary fiscal policy refers to the change..

  What determines the relative extent of these gains

Use Ricardian model to explain why and how both of the two countries considered countries gain from free trade between them. And what determines the relative extent of these gains?

  Leaching into groundwater supplies in a watershed

Suppose that the governmental authorities wished to decrease use of a pesticide that is leaching into groundwater supplies in a watershed by 60% from current use levels.

  Background of the case and the outcomes of the lawsuit

Provide a brief, four (4) sentence summary of the background of the case and the outcomes of the lawsuit. Examine both the positive and negative effects that the company in question experienced.

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