Aggregate Demand and Aggregate Supply - End of Chapter Problem Suppose an economy is in its long-run macroeconomic equilibrium when an oil shock shifts the short-run aggregate supply curve to the left resulting in a recessionary gap. a. How do the aggregate price level and aggregate output change in the short run as a result of the oil shock?
As a result of the oil shock, the aggregate price level ____ and the aggregate output___ This phenomenon is known as ____

Answers

Answer 1

a) The short-run aggregate supply curve is left-shifted in response to an oil shock. The decline in overall supply drives up prices and boosts unemployment. High unemployment accompanies high inflation in the economy. Stagflation is the name for this circumstance. The oil shock causes an increase in overall prices and a drop in overall output. Stagflation is the name given to this occurrence.

b.1) The government may implement an expansionary fiscal or monetary policy to offset the supply shock. The expansionary monetary or fiscal policy causes a rightward shift in the aggregate demand curve. This results in full employment and a rise in real GDP.

With real GDP at Yf and prices at PL, the aforementioned figure demonstrates that the economy is in long-term equilibrium. The short-run supply curve from SRAS to SAS1 moves to the left due to the negative supply shock. As a result, real GDP shrank to Y1 and prices rose to PL1. The negative output gap results in high prices and significant unemployment. As a result, the economy experiences both inflation and unemployment at the same time, which is referred to as stagflation.

The government conducts an expansionary fiscal or monetary policy to counter the effects of a supply shock. Such a measure causes the aggregate demand curve to change from AD to AD1 to the right. While the price level rose from PL1 to PL2, the actual GDP climbed to Yf.

b.2) The government uses a contractionary fiscal or monetary policy to lower the level of prices. A policy like this causes AD1 AD's aggregate demand curve to shift to the left. Real GDP fell from Yf to Y1, whereas the price level fell from PL2 to PL1.

The government can employ expansionary fiscal or monetary policy to return the real GDP to potential output. The government can implement contractionary fiscal or monetary policies to return the overall price level to its initial value.

c) The twin objectives of policymakers are to maintain price stability and full employment. However, a negative supply shock raises prices and unemployment. The price level rises as the unemployment rate declines. As prices are coming down, unemployment is rising.

Therefore, the challenge facing policymakers in the event of a negative supply shock is that they are unable to simultaneously attain price stability and full employment.

It is unable to attain both its twin objectives of price stability and full employment at once.

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The complete question is:

Aggregate Demand and Aggregate Supply - End of Chapter Problem Suppose an economy is in its long-run macroeconomic equilibrium when an oil shock shifts the short-run aggregate supply curve to the left resulting in a recessionary gap. a. How do the aggregate price level and aggregate output change in the short run as a result of the oil shock?

a) As a result of the oil shock, the aggregate price level ____ and the aggregate output___ This phenomenon is known as ____

b. What fiscal or monetary policies can the government use to address the effects of the supply shock? Use a diagram that shows the effect of policies chosen to address the change in real GDP. Use another diagram to show the effect of policies chosen to address the change in the aggregate price level.

To bring the real GDP back to potential output, the government can use         fiscal or monetary policy. (contract/ expansion)

To bring the aggregate price level back to its original level, the government           fiscal or monetary policies.  (expansionary/ contractionary)

c. Why do supply shocks present a dilemma for government policymakers?

1. If the government reduces inflation, unemployment worsens further.

2. Policies used to alleviate one problem work by worsening the other one.

3. If the government reduces unemployment, the price level increases further.

4. It cannot simultaneously achieve its twin goals of price stability and full employment.

Aggregate Demand And Aggregate Supply - End Of Chapter Problem Suppose An Economy Is In Its Long-run
Aggregate Demand And Aggregate Supply - End Of Chapter Problem Suppose An Economy Is In Its Long-run

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In the accompanying diagram, the economy is in a recessionary gap, meaning that the real GDP is below the long-run macroeconomic equilibrium. To return the economy to its long-run macroeconomic equilibrium, the government can use fiscal and/or monetary policy tools.

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The common information of the budget software are:

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Franklin Manufacturing provided the following information for month ended March 31:


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Beginning finished goods inventory: $9,000

Ending finished good inventory: $10,500

Cost of goods manufactured: $17,600


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Franklin Manufacturing provides the cost of goods sold is $16,100 with a Sales revenue: $15,000

What is sales revenue?Before any costs are subtracted, sales revenue is the income from goods and services.Sales revenue is typically calculated over a specific time frame, such a fiscal year or quarter.Net sales in accounting and financial accounting refer to operating revenues received by a business from the sale of its goods or provision of its services.Sales revenue are directly recorded on the income statement as Sales or Net sales and are also referred to as revenue.Due to its role in calculating the company's gross margin—the difference between revenue and cost of goods sold—gross margin expense is significant. The net is also computed using it.

The following formula can be used to determine the cost of products sold: Cost of goods sold is calculated as follows: Cost of goods manufactured - Ending finished goods inventory

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If a price increase of 5% causes the desired amount to decrease by 8%, the demand is elastic.

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Shantel just wrote a check for a bill that was entered in the Enter Bills window. The mistake she should to make correct void the check and enter the payment through the pay Bills window.

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A fixed rate is the most often used kind of interest since it is straightforward to compute, understand, and consistent.Both the client and the lender are aware of the precise interest rate responsibilities associated with a credit or loan account. Consider, for instance, a $10,000 bank loan to

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The present value of a series of payments received each year, starting with $1,000 is Rs 7518.

What exactly is a personal interest?

Personal hobbies are leisure activities one enjoys. They might include pastimes, athletic endeavors, creative endeavors, free time, volunteer work, cultural interests, spiritual practices, conventional activities, educational endeavors, and personal growth.

What kind of interest is ideal?

A fixed rate is the most often used kind of interest since it is straightforward to compute, understand, and consistent. Both the client and the lender are aware of the precise interest rate responsibilities associated with a credit or loan account. Consider, for instance, a $10,000 bank loan to

C = Rs 10,000

n = 5

r = 6%

PV = 1,0,000 / (1+0.06)^5

PV = Rs 7518.

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Option 5 is correct. Business Continuity Plan is the type of plans describes how a business resumes operation after a disaster

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is

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Answer:

Explanation:

in short supply

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The profit motive encourages people and organizations to improve their material well-being.

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People work to hold substantial effects and deliver money to do numerous conditioning and the companies need to be profitable to repay their plutocrats to investors and possessors. So it's accurate to articulate that The item that describes the force that encourages people and associations to ameliorate material well-being is the profit motive.

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Diversification is not a type of current problem that organizational development can help address.

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In the world of finance, diversification refers to the process of allocating capital in a way that limits exposure to any one specific asset or risk. By investing in a variety of assets, one typical way to achieve diversification is to lower risk or volatility. To lower portfolio risk, diversification is a technique that combines a wide range of investments. The most popular way to diversify your investment portfolio is to buy into a variety of asset classes, including stocks, bonds, real estate, and cryptocurrencies.

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Assigning manufacturing costs to work in process results in credits to all of the following except a. finished goods inventory. b. factory labor c. manufacturing overhead. d. raw materials inventory.

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stock of finished items. Correct! With the exception of finished goods inventory, all alternatives would be given credit when manufacturing costs are allocated to work in progress ("Assigning Manufacturing Costs to Work in Process").

In the event that manufacturing overhead is used, whose account is credited?

When overhead expenses are allocated to Work in Process, the Manufacturing Overhead account receives credit. The predetermined overhead rate, which is used to apply overhead, is based on estimates, thus in most cases, the amount of overhead imposed will differ from the amount of real cost spent.

Which of the following does not fall within the manufacturing cost category?

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In most societies, resources are allocated by Group of answer choices a single central planner. a small number of central planners. those firms that use resources to provide goods and services. the combined actions of millions of households and firms.

Answers

Answer:

In most societies, resources are allocated by

D. The combined actions of millions of households and firms.

Explanation:

In most societies, resources are allocated by

a.  a single central planner.

b.  a small number of central planners.

c.  those firms that use resources to provide goods and services.

d.  the combined actions of millions of households and firms.

I hope this finds you well!!!

In most societies, resources are allocated by the combined actions of millions of households and firms. The last option is the correct answer.

The process of identifying all available resources for a project, whether labor or monetary and strategically assigning them to tasks that allow them to do their best work is known as resource allocation.

To avoid staff burnout, effective resource allocation should ensure that work is distributed fairly across all resources. Effective resource allocation should empower teams by ensuring that resources have the requisite skills, knowledge, and training to fulfill assigned tasks.

Therefore, the combined actions of millions of households and firms result in resource allocation in most societies.

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Determine your company's mode of entry into foreign markets. This should be based upon a serious analysis of your company's risk-return tradeoff. In your opinion, has your company taken the right approach

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Every international business was nearly startled as a regional business and over time has espoused different modes of Entrance into the foreign business.

Different modes of entry into transnational business are grounded on the size of your business, your expansion strategies, the implicit size, the demand of your elected transnational request, the profitability, and the business terrain of the overseas country.

When businesses promote success within their domestic markets, they strive to expand their businesses into multinational markets, in a crack to imitate its blockbuster in overseas markets. Similarly, the company that I presently work for is trying to break into the middle- east with commodities that we aren't implicit of whether it'll bring about well there or not.

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An open-end mortgage is a specific kind of mortgage that enables the lender to advance more money by raising the outstanding balance of a loan up to the original loan amount.

An open-end mortgage allows the borrower to take out additional loans up to a predetermined amount on the same loan.

The borrower can avoid the time and hassle of hunting for a loan elsewhere by using an open-end mortgage. It is a form of rotating credit in which the borrower is permitted to receive a loan increase up to a sure cap. Typically, banks establish a loan-to-value ratio and ensure that the total loan amount—including both the original and the top-up loans—does not exceed that value ratio.

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