Answer the following questions on the basis of the three sets of data for the co
ID: 1208764 • Letter: A
Question
Answer the following questions on the basis of the three sets of data for the country of North Vaudeville:
(A ) ( B ) ( C )
a. Which set of data illustrates aggregate supply in the immediate short-run in North Vaudeville?
The data in (Click to select)A or B orC.
Which set of data illustrates aggregate supply in the short run in North Vaudeville?
The data in (Click to select)B or C or A.
Which set of data illustrates aggregate supply in the long run in North Vaudeville?
The data in (Click to select)A or B or C.
b. Assuming no change in hours of work, if real output per hour of work decreases by 15 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? (Click to select)Decrease or Increase.
Explanation / Answer
(a)
Aggregate supply in immediate short run - Data set C
(Because price level is unchanged, AS curve is horizontal)
Aggregate supply in short run - Data set B
(Because aggregate output supplied increases with increase in price level, AS curve is upward rising)
Aggregate supply in long run - Data set A
(Because real GDP is unchanged, AS curve is vertical)
(b)
When price level is 110, new output = 290 x 0.85 = 246.50
When price level is 100, new output = 265 x 0.85 = 225.25
When price level is 95, new output = 240 x 0.85 = 204.00
When price level is 90, new output = 215 x 0.85 = 182.75
(c)
New data reflects a Decrease in aggregate supply.
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