Chapter 24: Q 12. (page 601)
Suppose, after five years of sluggish growth, the European Union's economy picks up speed. What would be the likely impact on the U.S. trade balance, GDP, and employment?
The US will be benefitted from this situation.
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What is stagflation?
Table describes Santher's economy.
a. Plot the AD/AS curves and identify the equilibrium.
b. Would you expect unemployment in this
economy to be relatively high or low?
c. Would you expect prices to be a relatively large
or small concern for this economy?
d. Imagine that input prices fall and so AS shifts
to the right by units. Identify the new
equilibrium.
e. How will the shift in AS affect the original
output, price level, and employment?
If Congress cuts taxes at the same time that businesses become more pessimistic about the economy, what is the combined effect on output, the price level, and employment using the AD/AS diagram?
Why might it be important for policymakers to know which in zone of the SRAS curve the economy is?
On a microeconomic demand curve, a decrease in price causes an increase in quantity demanded because the product in question is now relatively less expensive than substitute products. Explain why aggregate demand does not increase for the same reason in response to a decrease in the aggregate price level. In other words, what causes total spending to increase if it is not because goods are now cheaper?
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