27. Answer the following questions on the basis of the three sets of data for th

Question

27.

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? The data in C Which set of data illustrates aggregate supply in the short run in North Vaudeville? The data in B Which set of data illustrates aggregate supply in the long run in North Vaudeville? The data in A b. Assuming no change in hours of work, if real output per hour of work decreases by 5 percent, what will be the new levels of real GDP in the right column of B? Instructions: Round your answers to 2 decimal places. With a price level of 110. new output = With a price level of 100. new output = With a price level of 95, new output = With a price level of 90. new output = Does the new data reflect an increase in aggregate supply or does it indicate a decrease in aggregate supply? Decrease

Explanation / Answer

a) Immediate short run when Price level is constant i.e. C

short run when Price level is changing with GDP i.e. B

Long run when GDP is constant i.e. A

b)

Price level Real GDP Real GDP after decrease of 5% per hour work 110 285 270.75 100 260 247 95 235 223.25 90 210 199.5

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