Long-run aggregate supply of the economy

Assignment Help Microeconomics
Reference no: EM13724841

Depict an economy in a short-term equilibrium that is lower than the long-run aggregate supply of the economy.

a. Depict an economy in a short-term equilibrium that is lower than the long-run aggregate supply of the economy. That is, show an equilibrium that has the economy operating below its potential. Show this situation graphically, including short-run aggregate demand and aggregate supply, as well as long-run aggregate supply. Explain one possible way that the economy could have arrived at this unfortunate situation.
b. In terms of major "economic indicators" (GDP, unemployment, CPI), describe in general terms what is happening in the economy described in part a. of this question.

c. List two factors, either government policy or changes in the private sector, that could increase aggregate demand, resulting in an equilibrium at full employment? Briefly describe how each might work.

d. If no changes in aggregate demand lift the economy back to full employment, what might hinder or even prevent reaching full employment solely through changes in aggregate supply?

Reference no: EM13724841

Questions Cloud

Incident and crime scene procedures : Determine the purpose of creating a digital hash. Explain in detail the need for this procedure and the potential damage if this critical step is not taken.
State the model in mathematical terms : Develop a theory based on the first assignment that could be estimated with multiple regression - State the model in mathematical terms and Estimate the model and interpret the meaning of the coefficient estimates.
Identify the strengths of learning style : Question 1: Identify the strengths of your learning style? Question 2: Compare these strengths to your personality type.
Develop a learning and development plan : We strive to meet or exceed patient/customer needs and expectations and work as a team to improve every aspect of care and service in our organization.
Long-run aggregate supply of the economy : Depict an economy in a short-term equilibrium that is lower than the long-run aggregate supply of the economy.
Discuss the films little big man and star wars : Discuss the films, Little Big Man and the film, Star Wars. How do they relate to the revival of the American film industry in the 1970s?
Design capacity refers to the maximum amount : Design capacity refers to the maximum amount that a production facility can produce. The variable cost per unit is higher for job shop production than assembly line production.
What is the free trade agreement of the americas : What are the differences between a monetary union, a customs union, and a common market - What is the Free Trade Agreement of the Americas
Do you think the u.s. is headed for a collapse : Do you think the U.S. is headed for a collapse within the next few decades?

Reviews

Write a Review

Microeconomics Questions & Answers

  Draw the ad-as diagram representing us economy in a

draw an ad-as diagram representing the u.s. economy in a recession. also draw a diagram of the u.s. labor market in the

  Calculate after tax rate of return of alternative using

the plant has accumulated savings of 60000 to acquire a new machine for quality assurance. the new quality control

  What you expect to happen to the number of firms

Consider a perfectly competitive market. Analyze and explain in detail using graphical tools to show what you expect to happen to the number of firms and firm profitability in the short run and long run a) if demand for the product falls and b) if..

  X y 6step 1 the lagrangian function is set asstep 2 take

x y 6step 1 the lagrangian function is set asstep 2 take the first order partial derivatives of the lagrangian and set

  Create the counter-argument from economics point of view as

many environmentalists or general members of the public are horrified by the notion of marketable pollution permits.

  What is the standard deviation of the investment

An investment opportunity will pay $10 with a 20% probability, $20 with a 40% probability, $30 with a 30% probability, and $40 with a 10% probability. what is the standard deviation of the investment?

  Comparing the situation of a nominal interest rate

Comparing the situation of a nominal interest rate of 10 percent and an inflation rate of 9 percent with a nominal interest rate if 6 percent and inflation rate 2, consumers would borrow more in which situation?

  Store inventory in a company-owned warehouse

In a meeting about whether to store inventory in a company-owned warehouse or rent a warehouse, a colleague says, "We should use our own warehouse and save the cost of renting one." Do you agree or disagree? Explain

  Money to invest in an employee benefit plan

PARC Company has money to invest in an employee benefit plan and you have been chosen as the plan's trustee. As an employee yourself, you want to maximize the interest earned on this investment and have found an account that pays seven percent compou..

  What sorts of developments might discourage

Suppose that you were in business and intended to build a plant to turn out a promising new item-say, a pencil that would last twice as long as the kinds available now. What sorts of developments might discourage you from making this investment..

  Marginal product of labor and marginal product of capital

A firm produces an output y using labor and capital, whose quantities are denoted respectively by x_L and x_K. Suppose this firm's production function is given by

  What is the best practices frontier

What is the best practices frontier? How does this relate to competitive advantage? Explain why rent seeking competition tends to dissiapte rents-to drive them down so that there are no abnormal rents?

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