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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.

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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.

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Most popular questions from this chapter

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?

Has China's production possibilities curve been shifting outward or inward were the past 40years? Explain your answer

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?

Why might a return of the U.S. population growth rate to its prior level also tend to boost the growth of U.S. Long-run aggregate supply? (Hint: Recall that real GDP growth is generated by the contributions of growth in labour and capital and growth in productivity of these resources.)

In Figure 10-2, if the economy acquires a larger amount of capital goods in the current year, does a larger or smaller outward shift in the production possibilities curve result? Does the LRAS curve shift more or less far to the right? Why?
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