Answer the following questions on the basis of the three sets of data for the co

Question

Answer the following questions on the basis of the three sets of data for the country of North Vaudeville:

Which set of data illustrates aggregate supply in the immediate short run in North Vaudeville?

a. The data in (Click to select) B/C/A

Which set of data illustrates aggregate supply in the short run in North Vaudeville?

b. The data in (Click to select) C/A/B

Which set of data illustrates aggregate supply in the long run in North Vaudeville?

c. The data in (Click to select) B/C/A

Assuming no change in hours of work, if real output per hour of work decreases by 25 percent, what will be the new levels of real GDP in the right column of C?

Instructions: Round your answers to two decimal places.

d. Price level 110: New output = ____

e. Price level 100: New output = ____

f. Price level 95: New output = ____

g. Price level 90: New output = ____

h. Do the new values reflect an increase in aggregate supply or do they indicate a decrease in aggregate supply?

(Click to select) decrease/increase

(A) (B) (C) Price Level Real GDP Price Level Real GDP Price
Level Real
GDP 100 210 110 235 110 285 100 235 100 235 100 260 100 260 95 235 95 235 100 285 90 235 90 210

Explanation / Answer

Answer:

A)

Immediate short run: Column A: Price is fixed

Short run: Column C: As price increases, GDP increases

Long run: Column B: Output is fixed

B)

P is 110, output is 285(1-0.25) = 213.75

P is 100, output is 260(1-0.25) = 195

P is 95, output is 235(1-0.25) = 176.25

P is 90, output is 210(1-0.25) = 157.50

Decrease in aggregate supply

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