--%>
Assignment Help - homework help

Determine the level of real output in the long run

Consider the full employment level of real output (Q) for a hypothetical economy will be $250 and the price level (P) at first is 100. Employ the short-run aggregate supply schedules below to answer the questions that follow:

336_short-run aggregate supply schedules.png

Determine the level of real output in the long run while the price level increase from 100 to 125? While it falls from 100 to 75? Depict each situation.

E

Expert

Verified

$250; $250. In the long run, a rise in the price level to 125 leads to nominal wage increase. The AS(P100) schedule alter to AS(P125) and Q returns to $250, now at a price level of 125. In the long run, a reduction in price level to 75 leads to lower nominal wages, yielding aggregate supply schedule AS(P75). Equilibrium Q returns to $250, now at a price level of 75.

   Related Questions in Finance Basics

  • Q : Does high operating leverage mean high

    Does high operating leverage for all time mean high business risk? Describe. High operating leverage does not for all time mean high business risk. If the company's sales are fairly stable then the variation into operating income would be smal

    		•
  • Q : Explain euro Normal 0 false false false

    Normal 0 false false

  • Q : What is Prior Year Adjustment Prior

    Prior Year Adjustment: An adjustment for the difference among prior year accruals and real expenditures or revenues. The previous year adjustment amount is usually comprised in the Fund Condition Statements as an adjustment to realign the starting fun

    		•
  • Q : Creative destruction Normal 0 false

    Normal 0 false false

    		•
  • Q : Define Claim Schedule Claim Schedule :

    Claim Schedule: It is a request from a state department to the State Controller's Office to distribute payment from a legal appropriation or account for a legal state obligation. The claim agenda recognizes the appropriation or account to be charged,

    		•
  • Q : What are Feeder Funds Feeder Funds :

    Feeder Funds: For lawful basis accounting purposes, funds into which some taxes or fees are deposited on collection. In some situations administrative costs, collection expenses, and refunds are paid. The balance of such funds is transferable at any t

    		•
  • Q : Describe the bird in the hand theory of

    Describe the bird in the hand theory of cash dividends. The bird in the hand dividends theory says that dividends attained now are better than a promise of future dividends. Uncertainty is resolved while a dividend is paid.

    		•
  • Q : Finance End of Chapter Problems Page

    End of Chapter Problems Page 150 5.2 The Audiology Department at Randall Clinic offers many services to the clinic’s patients. The three most common , along with cost and utilization data, are as follows: Service Variable cost per service Annual Direct Fixed cost Annual Number of Visits Basic

    		•
  • Q : Gateways for biometric The different

    The different Gateways for biometric are as following: Transaction security: this is to secure customers transactions and so to protect their privacy both remotely and onsite.

  • Q : Describe the financial leverage effect

    Describe the financial leverage effect and what causes it? Explain the potential benefits and negative consequences of high financial leverage? Financial leverage is the additional volatility of overall income caused through the presence of fix

    		•