EC141 Week 5 Homework Chapter 7
EC141 Week 5 Homework Chapter 7 2. What assumptions trigger the immediate-short-run combination provide curve to be horizontal? Why is the long-run combination provide curve vertical? Clarify the form of the short-run combination provide curve. Why is the short-run curve comparatively flat to the left of the full-employment output and comparatively steep to the fitting? LO2 three. Different issues equal, what results would every of the next have on combination demand or combination provide? In every case use a diagram to point out the anticipated results on the equilibrium worth degree and the extent of actual output. LO3 a. A discount within the economy’s actual rate of interest. b. A main improve in Federal spending for well being care (with no improve in taxes). c. The full disintegration of OPEC, inflicting oil costs to fall by one-half. d. A 10 p.c discount in private revenue tax charges (with no change in authorities spending). e. A sizable improve in labor productiveness (with no change in nominal wages). f. A 12 p.c improve in nominal wages (with no change in productiveness). g. A sizable depreciation within the worldwide worth of the greenback. four. Different issues equal, what impact will every of the next have on the equilibrium worth degree and degree of actual output? LO3 a. An improve in combination demand within the steep portion of the combination provide curve. b. An improve in combination provide with no change in combination demand (assume that costs and wages are versatile upward and downward). c. Equal will increase in combination demand and combination provide. d. A discount in combination demand within the flat portion of the combination provide curve. e. An improve in combination demand and a lower in combination provide. 7. In early 2001 funding spending sharply declined in the USA. Within the 2 months following the September 11, 2001, assaults on the USA, consumption additionally declined. Use AD-AS evaluation to point out the 2 impacts on actual GDP. LO4