Logout Open In App
Open In App
Warning: foreach() argument must be of type array|object, bool given in /var/www/html/web/app/themes/studypress-core-theme/template-parts/header/mobile-offcanvas.php on line 20

Chapter 10: Q. cFCT (page 224)

What would happen to the South African inflation fate in future years if the AD curve were to begin shifting rightward at a more rapid pace than the LRAS curve?

Short Answer

Expert verified

Increasing anyof these components shifts the AD curve tothe correct,leading to a greater real GDP and to upward pressure onthe worth level.

Step by step solution

01

Given Information

The aggregate demand curve, or AD curve, shifts to the right because the components purchase, industry, public expenditure, and investment on minus the value importation all grow as money supply improves. As of these portions drop, its AD curve to shift back to the left.

02

Explanation

If the AD curve shifts tothe right, then the equilibrium quantity of output and also the indicant will rise. If the AD curve shifts to the left, then the equilibrium quantity of outputand so the index will fall.

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Start your free trial

Over 30 million students worldwide already upgrade their learning with Vaia!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

Continuing from Problem 10-2,suppose that the full-employment level of nominal GDP in the following year rises to 21.85trillion. The long-run equilibrium price level, however, remains unchanged. By how much (in real dollars) has the long-run aggregate supply curve shifted to the right in the following year? By how much, if any, has the aggregate demand curve shifted to the right? (Hint: The equilibrium price level can stay the same only if LRAS and AD shift rightward by the same amount.)

Take a look at the panel (b) of Figure 10-8. What change in the position of the aggregate demand curve could generate inflation-that is, an increase in the equilibrium price level? What type of variation in the quantity of money placed into circulation by the Federal Reserve could generate such a change in the position of the aggregate demand curve?

Consider the diagram below when answering the questions that follow.

a. Suppose that the current price level is P2. Explain why the price level will decline toward P1.

b. Suppose that the current price level is P3. Explain why the price level will rise toward P1.

As more of the nation's systems of river locks become deficient, what is happening to the pace at which the U.S. production possibilities curve shifts outward over time?

Explain how, if at all, each of the following events would affect equilibrium real GDP and the long run equilibrium price level.

a. A reduction in the quantity of money in circulation

b. An income tax rebate (the return of previously paid taxes) from the government to households, which they can apply only to purchases of goods and services

c. A technological improvement

d. A decrease in the value of the home currency in terms of the currencies of other nations
See all solutions

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.

Sign-up for free