Chapter 10: Q. aFCT (page 215)
Has China's production possibilities curve been shifting outward or inward were the past years? Explain your answer
Every point along the curve is efficient; points shifting outward the curve are unobtainable or inefficient.
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Suppose that there is a sudden rise in the price level. What will happen to economywide planned spending on purchases of goods and services? Why?
Explain whether each of the following events would cause a movement along or a shift in the position of the L.RAS curve, other things being equal. In each case, explain the direction of the movement along the curve or shift in its position.
a. Last year, businesses invested in new capital equipment, so this year the nation's capital stock is higher than it was last year.
b. There has been an 8 percent increase in the quantity of money in circulation that has shifted the curve.
c. A hurricane of unprecedented strength has damaged oil rigs, factories, and ports all along the nation's coast.
d. Inflation has occurred during the roast year as a result of rightward shifts of the curve.
Take a look at the panel (a) of Figure 10-6. In the absence of a change in aggregate demand, what effect does economic growth have on the price level over time, other things being equal? Why?
How could a return of the U.S. population growth rate to its previous level reduce the disinflationary effect of secular stagnation?
How are deficiencies in the U.S. river system affecting the extent to which the U.S. long-run aggregate supply curve shifts rightward each year?
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