EC140 Chapter 23: Chapter 23 - Ragan Macroeconomics - EC140
283 views2 pages
21
EC140 Full Course Notes
Verified Note
21 documents
Document Summary
Chapter 23 textbook notes ragan macroeconomics: Ae = aggregate expenditure: nx = net exports. Rise in p --> lowers real values of private assets --> decrease in c --> shifts ae down. Rise in p --> canadian goods become more expensive --> canadians buy foreign goods instead --> foreigners buy less canadian goods --> decrease in nx --> shifts ae down. Shows combinations of real gdp and price level that makes ae = y. Rise in p causes ae to shift down, leads to movement up and left on ad curve, reflecting a fall in ae = y. Any change other than p that causes ae to shift will cause ad to shift. Ae shifts up = ad shifts right. Ae shifts down = ad shifts left. Simple multiplier measures horizontal shift in ad curve. Shows relation between p and quantity of aggregate output supplied, for given technology & factor prices.
Get access
Grade+
$40 USD/m
Billed monthly
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
10 Verified Answers
Class+
$30 USD/m
Billed monthly
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
7 Verified Answers
Related Documents
Related Questions
| a) | In the AD-AS model, stagflation does not persist, because the working of the self-correcting mechanism of the economy _____ the level of output and _____ the price level until the economy eventually returns to a long-run equilibrium state, where actual output _____ potential output.
|
| b) | The LRAS curve is drawn as a vertical line at potential output (Y*) to indicate that
|
| c) | Stagflation arises in the context of the AD-AS model when some external factor causes
|
| d) | If the SRAS curve is positively sloped, then a decrease in the demand for Canadian-made goods in Europe will lead to _____ in the price level, in the short run.
|
| e) | Which of the following will shift the aggregate demand curve to the right?
|
| f) | Suppose a stock market crash decreases the stock of household wealth and therefore causes autonomous consumption to fall. Which of the following is the likely result?
|
| g) | An economy is characterized by the AD equation P = 200 ? 0.02Y, SRAS equation P = 100 and LRAS equation Y* = 5000. In the absence of any change in policy or exogenous shocks, this economy will achieve a long-run price level of
|
| h) | The AD-AS model depicts a self-correcting economy. This means that the price level in the model adjusts automatically in response to a(n) _____ gap, so as to eliminate the _____ gap in the long run, without requiring any help from government policies.
|
| i) | The aggregate demand curve shows
|
| j) | Consider an economy initially at long-run equilibrium with output (Y) equal to potential output (Y*). If the SRAS is positively sloped, then a shift to the right of the AD curve will lead to _____ in the price level, in the short run. In the long run, the SRAS curve will shift to the _____ and the equilibrium will be at __________.
|
