12 of 14 Settings inthenew shortnnequilitnum, theunemploymentrate,the .. A unemp
ID: 1107499 • Letter: 1
Question
12 of 14 Settings inthenew shortnnequilitnum, theunemploymentrate,the .. A unemployment rate in the initial equibrium prior to the increase in the price of oil. BAg SP485, LRAS SRAS SRAS Which of the following best explains how and why the economy will adjust bock to long-run equilibrium? A. Aggregate demand wil decrease, restoring the onginal eqlibrium pre OB. Short-run aggregate supply will decrease (shit letward) as frms and and quantity workers adjust to the new, higher price level. Aggregate demand will increase, restoring the oniginal equilibrium price and quantity O D. Shon-run aggregate supply will increase (shit rnightward) as the recession makes firms and workers wiling to accept lower wages and prices Ater the adjustment of aggregate supply is complete, the economy returns to AD, equilbrim at EtConedales(3.24,6.79 O A. in between points A and 8 O D. a point lower than (ie, south-east of) A When the economy returns to long-run equlibrium again O A. real GDP will be lower and the unemployment rate and the price level will be higher compared to the initial equiibrium value prior to the increase in price of oil real GDP the unemployment rate, and the pree level wil be the same as the initial equilibrium values prior to the increase in the price of or B. O C. real GDP and the unemployment rate will be the same but the pice level will be higher compared to the initial equalibrium value prior to the increase in the price of oil D. the unemployment rate wil be the same, but real GDP will be lower and the price level higher comparod to the initial equilibrium value prior to the increase in the price of oil. An object is selected. Delete it, or move it with arrows or by draggingll Delete it, or move it with arrows or by araggingExplanation / Answer
At the new equilibrium point given by the intersection of AD1 and SRAS2, unemployment will be higher than at initial equilibrium because the output is lower.
(1) The correct answer is option (D) In the long run, The short run aggregate supply curve will shift rightwards as the recession makes firms and workers willing to accept lower wages and prices.
(2) After the adjustment is complete, the economy returns to equilibrium at point A.
(3) The correct option is B When the economy returns to the long run equilibrium, the real GDP, unemployment rate and price level would be the same as that as the long run equilibrium before rise in oil prices.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.