N false false false en-us x-none x-none , Ask an Expert

Economics

Assume that the long-run aggregate supply curve is vertical at Y = 3,000 while the short-run aggregate supply curve is horizontal at P = 1.0. The aggregate demand curve is Y = 3(M/P) and M = 1,000.

a. If the economy is initially in long-run equilibrium, what are the values of P and Y?

b. Now suppose a supply shock moves the short-run aggregate supply curve to P = 1.5. What are the new short-run P and Y?

c. If the aggregate demand curve and long-run aggregate supply curve are unchanged, what are the long-run equilibrium P and Y after the supply shock?

d. Suppose that after the supply shock the Fed wanted to hold output at its long-run level. What level of M would be required? If this level of M were maintained, what would be long-run equilibrium P and Y?

View complete question

Microeconomics, Economics

Category:- Microeconomics
Reference No.:- M91231980

Have any Question?Write your Review or question?

Related Questions in Microeconomics

Question pricing many supermarkets sell both branded and

Question: Pricing Many supermarkets sell both branded and private label goods. Suppose that a supermarket estimates that the demand for its private-label colas is less elastic than the demand for Coca-Cola. How should it ...

Question barney has a snow removal business the price he

Question: Barney has a snow removal business. The price he charges for snow removal is $10 for each driveway. He clears 20 driveways during the week. His average cost is $12.50, his average variable cost is $6.25, and hi ...

Question india and china have roughly the same size

Question: India and China have roughly the same size population, and although per capita GDP in China is probably somewhat larger, the difference is not very great. Labor costs are lower in India than in China, and in sp ...

Question illustrate graphically the monopolists profit

Question: Illustrate graphically the monopolist's profit maximization problem. Include the monopolist's profit-maximizing price and level of output, any consumer surplus, any producer surplus, and any deadweight welfare ...

Question 1 suppose demand and supply have constant

Question: 1. Suppose demand and supply have constant elasticity equal to 3. What happens to equilibruim price and quantity when the demand increases by 3% and supplu decreases by 3%? 2. Show that elasticity can be expres ...

Quesiton we went to the countertop shop on saturday it has

Quesiton: We went to the Countertop Shop on Saturday. It has a nice storefront along Airport Highway and a nice showroom, too. Better than you would think looking at its current web presence. Some helpful info we got fro ...

Question you are the author of a popular csr article for

Question: You are the author of a popular CSR article. For this week's discussion post, discuss the main reasons why Apple is or is not a socially responsible organization. List at least two examples of Apple's actions t ...

Question give two real life examples of how economics can

Question: Give two real life examples of how economics can be used to improve decision-making with original examples not found in the textbook. Explain how following the three step approach can be used 1. Who is making b ...

Question is a tax on margarine efficient in the economic

Question: Is a tax on margarine efficient in the economic sense of the term? Why would margarine producers prefer to have an excise tax impose on both butter and margarine? Would such a tax be more or less efficient than ...

Question assume that a 1 change in the inflation rate

Question: Assume that a 1% change in the inflation rate causes a 1% increase in nominal interest rates, which in turn causes a 1% drop in real growth the following year. During the latter half of the 1990s, real growth a ...

4,153,160 Questions Asked
13,132 Experts
2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Recent Questions

Ask Microeconomics Expert