(03.07 HC) Use the graph to answer the question that follows. An economy attained a long-run equilibrium at point A. How does the price adjust in the long run when the aggregate demand rises from AD1 to AD2 to bring the economy back to its natural rate?

(04.06 MC) Assume that an economy is going through a slump and is experiencing less than ideal output levels and a decreased national income. In a banking system with limited reserves, which one of the following actions can a central bank take in order to fix the economy?

(03.01–03.08, 04.07 HC) A country is operating below full employment. Illustrate this economy on a fully-labeled aggregate demand—aggregate supply model. Include aggregate demand, short-run aggregate supply, and long-run aggregate supply. Label the short-run equilibrium price PE and the short-run equilibrium output YE. Label the full-employment level of output YF. If the government and central bank do not intervene, how would this economy adjust in the long run? Explain. Illustrate the process of part (b) on your graph from part (a). The government decides to use fiscal policy to correct the economic situation in part (a). Assume the difference between the short-run and long-run equilibrium output is worth $80 billion, and the marginal propensity to consume is 0.9. Calculate one specific and effective fiscal policy action the government could take. What would be the short-run impact of the government’s action on the aggregate price level? What would be the short-run impact of the government’s action on the potential output of the economy? Will the long-run equilibrium price level if the government intervenes be less than, equal to, or greater than the long-run equilibrium price level without intervention? Show the impact of the government intervention from part (d) on the equilibrium real interest rate on a fully labeled loanable funds market graph. Will the long-run aggregate supply curve move as a result of the change from part (h)? Explain.

(03.03 MC) Use the following graph to answer the question that follows.Which of the following represents the relationship between inflation and unemployment in the short run?

(01.03 MC) The table below shows the production of goods in two countries, A and B, for jewelry and cloth. Country Jewelry (in units) Cloth (in units) A 84 21 B 12 120 What type of production advantage do A and B have in producing cloth?

(04.07 MC) Use the graph to answer the question that follows.Assume that the loanable funds market is in equilibrium, as shown in the graph. If households become concerned about retirement income and spend less, what will happen in this market for loanable funds?

(03.01 LC) Which of the following will lead to an increase in a country’s aggregate demand?

(03.03 MC) Which of the following statements about the short-run aggregate supply curve (SRAS) is true?

(03.03 MC) Which of the following statements about the short-run aggregate supply curve (SRAS) is true?

(02.04 MC) Which of the following is true about the consumer price index (CPI) as an economic indicator?