Suppose the average U.S. worker has a large increase in productivity. What impact would this have...
Question:
Suppose the average U.S. worker has a large increase in productivity. What impact would this have on aggregate demand, short-run aggregate supply, and real GDP?
Worker:
A worker is a person who engages in different production processes and helps generate the business firm's output. A firm is mandatory to hire workers for producing goods and services. Without the services of a worker, production cannot take place.
Answer and Explanation: 1
Become a Study.com member to unlock this answer! Create your account
View this answer- The aggregate demand, aggregate supply, and the real GDP will increase.
Suppose there is a large increase in the productivity of U.S. workers. The...
See full answer below.
Ask a question
Our experts can answer your tough homework and study questions.
Ask a question Ask a questionSearch Answers
Learn more about this topic:
Get access to this video and our entire Q&A library
Understanding Aggregate Supply & Demand
from
Chapter 60 / Lesson 2
6.2K
In economics, aggregate supply and demand are used to determine the production and purchasing power of the economy. Learn about aggregate supply and aggregate demand, and explore the details of the AS/AD model devised by John Maynard Keynes.
Related to this Question
- In the short run, what is the impact on the price level and real GDP of a decline in productivity?
- Suppose firms throughout the economy experience falling demand, causing them to lay off workers. How is this likely to affect real GDP?
- Does Aggregate Demand and Aggregate Supply always occur at full-employment level? a) If yes, will there be some unemployment? Explain. b) If no, then the actual real GDP may be different from the potential real GDP. When the actual and potential GDP are
- Suppose foreign countries purchase an unusually large number of U.S. manufactured passenger and military airplanes. What impact would this have on aggregate demand, short-run aggregate supply, and real GDP?
- How does Consumption affect GDP? Can GDP actual rise while domestic consumption decreases? How? How does Long Run Aggregate Supply relate to GDP? Why is Short Run Aggregate Supply Important? How is pr
- In the short run, how will an increase in aggregate demand most likely affect the overall price level and real GDP? a) Price level would decrease and Real GDP would decrease. b) Price level would de
- Assume that an economy has 5,000 workers, each working 2,500 hours per year. The average real output per worker is $20. What would the total output or real GDP be?
- Diagrammatically show and explain the short-run effect of an increase in labor productivity on the price level and real GDP.
- How will an increase in aggregate demand affect GDP in the short run? How does this compare to the long-run change in GDP?
- In the short run, what is the impact on the price level and Real GDP of each of the following? a. An adverse supply shock. b. A decline in productivity.
- What effect does an increase in the price level have on economic output (real GDP) in the long run?
- According to Keynesian theory, if equilibrium real GDP is below the full-employment level, then an increase in aggregate demand will result in which of the following changes in equilibrium? a. Real GDP and the price level will both rise. b. Real GDP will
- Assume that an economy has 5,000 workers, each working 2,500 hours per year. The average real output per worker is $20. Suppose that in year 2, the number of workers increased to 5,500. What would the real GDP be?
- Suppose the economy is below full employment output. Government purchases (G) increase by $100 million. Assuming all else equal, if the marginal propensity to consume is 0.75, then how much should GDP increase by?
- Assume that we are at a long-run equilibrium level of $19 trillion real GDP. Assume that there is a major decrease in consumer and firm expectations for the economy in the future. Which of the following best describes what will? follow? A. Unemployment wi
- Increases in productivity are a major contributor to increased GDP. What is a result of increased GDP? a. increased supply of products b. increased standard of living c. increased wages for workers d. none of the above
- If average price of GDP increases, what happens to quantity demanded of real GDP in Aggregate Demand? (based on "Interest-rate Effect", "Real Balance effect" and "international Trade effect".)
- The U.S. economy is at full employment when the following event occurs: A deep recession hits the world economy. Explain the effect of this event on the U.S. real GDP and price level using the AD-AS diagram. (a) Real GDP falls, and the price level falls.
- Suppose workers become pessimistic about their future employment, which causes them to save more and spend less. If the economy is on the intermediate range of the aggregate supply curve, then a. both real GDP and the price level will fall. b. real GDP
- Suppose workers become pessimistic about their future employment, which causes them to save more and spend less. If the economy is on the intermediate range of the aggregate supply curve, then a. both real GDP and the price level will fall. b. real GDP wi
- Suppose Canada's economy is in a long-run equilibrium with real GDP equal to potential output. Now suppose there is an increase in world demand for Canada's goods. In the short run, Blank. In the lon
- Diagrammatically represent the short-run effect of an increase in labor productivity on the price level and on Real GDP.
- If the price level and the money wage rate rise by the same percentage, what happens to the quantity of real GDP supplied? Along which aggregate supply curve does the economy move?
- According to the Aggregate Demand Aggregate Supply model, a decrease in Aggregate Supply would cause: A. prices to rise and real GDP to fall. B. prices and real GDP to rise. C. prices to fall and real GDP to rise. D. prices and real GDP to fall.
- If the economy is operating in the Keynesian zone of the SRAS curve and aggregate demand falls, what is likely to happen to real GDP?
- According to classical macroeconomic theory, if real GDP is at the full-employment level, then an increase in aggregate demand will result in which of the following changes in equilibrium? a. Real GDP will rise, but the price level will remain constant.
- Assume that full-employment real GDP is Y = $1,200 billion, the current equilibrium real GDP is Y = $1,600 billion, and the MPC = 0.8. To bring the economy to a full-employment real GDP, a. a recessionary gap must be bridged by increasing aggregate expen
- When both short-run aggregate supply and aggregate demand increase, which of the following can be said for certain? A. The price level rises, but real GDP falls. B. Both the price level and real GDP rise. C. The price level rises, but the change in real G
- Suppose the government increases aggregate demand to a level that increases GDP above its long-run equilibrium level. What sequence of events would follow? A)price rise; GDP increases; workers demand
- Suppose U.S. prices fall relative to Japanese prices. How will this affect aggregate demand and GDP in the United States?
- Suppose full employment GDP is at $700 billion worth of GDP, and the economy is currently at $400 billion. If the multiplier is 4, by how much should Autonomous Consumption (C0) change to increase the level of Real GDP to reach full employment?
- The economy of Tuckerland has the following aggregate demand and supply schedules, reflecting real GDP in trillions of dollars: a. Graph the aggregate demand curve and the short-run aggregate supply curve. b. What are short-run equilibrium real GDP and th
- How would a reduction in nominal wages affect real GDP and the price level in the short run?
- Assume the economy is in recession and real GDP is below full employment. The marginal propensity to consume (MPC) is 0.75, and the government follows Keynesian economics by using expansionary fiscal policy to increase aggregate demand (total spending). I
- Assume the economy is in recession and real GDP is below full employment. The marginal propensity to consume (MPC) is 0.50, and the government follows Keynesian economics by using expansionary fiscal policy to increase aggregate demand (total spending). I
- Considering the Solow model, what will be the effect of an immediate doubling of the size of the labour force on GDP per capita? What is the effect in the long run?
- If the economy is operating in the neoclassical zone of the SRAS curve and aggregate demand falls, what is likely to happen to real GDP?
- Assume the economy is in recession and real GDP is below full employment. The marginal propensity to consume is 0.75, and the government follows Keynesian economics by using expansionary fiscal policy to increase aggregate demand (total spending). If an i
- According to classical macroeconomic theory, if real GDP is at the full-employment level, an increase in aggregate demand will result in which of the following changes in equilibrium? a. Real GDP will rise, but the price level will remain constant. b. Rea
- How do gains in labor productivity lead to gains in GDP per capita?
- What is the difference between a change in the quantity supplied of Real GDP and a change in short-run aggregate supply?
- Assume the economy is in recession and real GDP is below full employment. The marginal propensity to consume (MPC) is 0.80, and the government increases spending by $500 billion. As a result, aggregate demand will rise by: a. zero. b. $2,500 billion. c. m
- Assume the economy is in recession and real GDP is below full employment. The marginal propensity to consume (MPC) is 0.80, and the government increases spending by $500 billion. As a result, aggregate demand will rise by a. zero. b. $2,500 billion. c. mo
- What impact would each of the following have on real GDP? Would economic well-being increase or decrease as a result? A. On average, people in a country decide to increase the number of hours they work by 5%. B. Spending on homeland security increases in
- What do economists refer to full-employment output as? a. real GDP. b. supernatural GDP. c. nominal GDP. d. real GDP when unemployment equals the natural rate. e. gross domestic product (GDP) per capita.
- Use the graph below to answer the following: a. What is the short-run equilibrium real GDP? b. What is the short-run equilibrium price level? c. How large is the output gap? d. If the MPS is 0.25, find the spending multiplier. e. Find the change in s
- If the US economy starts at its long-run equilibrium, and then the European Union enters into a recession, what is the effect (predicted by the AD/AS model) on the equilibrium level of US real GDP in
- What impact would a decrease in the size of the labor force have on GDP and the puce level according to the AD/AS model?
- In the short run, what is the impact on the price level and real GDP of a beneficial supply shock?
- According to the real business cycle model, a. increases in aggregate demand do not affect GDP. b. increases in aggregate demand lower GDP. c. increases in aggregate demand lower the price level. d. increases in aggregate demand raise GDP.
- 1. The short-run aggregate supply curve shows: a. What happens to output in an economy as the price level changes, holding all other determinants of real GDP constant. b. What happens to output in a
- Suppose current equilibrium real GDP is $18 trillion while potential real GDP is $17 trillion. Which one of the following is likely? A. The economy is in a recession B. Aggregate supply will decrease
- 1. Suppose total output (real GDP) is $10,000 and worker-hours are 20,000. We can conclude that: a) nominal GDP must be between $10,000 and $20,000. b) labor productivity must be $0.50. c) the pric
- If the government increased spending to help education, would it shift the aggregate demand curve, aggregate supply curve, or both? How would it affect the price level and real GDP?
- Suppose the multiplier is equal to 3. If the full employment level of output is $1 trillion ($1000 billion) and the economy is stuck at a recessionary equilibrium with GDP equal to $700 billion, how large an increase in government spending would be requir
- If the long-run aggregate supply curve gives the level of potential real GDP, how can the short-run aggregate supply curve ever lie to the right of the long-run aggregate supply curve?
- Assume that the government injects 100 million into the economy. What impact would you expect on GDP given that the marginal propensity to consume is 0.8? Why?
- Please explain in detail how the answer was arrived at. Average labor productivity tends to be A) procyclical and less variable than real GDP B) procyclical and more variable than real GDP C) countercyclical and less variable than real GDP D) countercycli
- Suppose the U.S. economy becomes overheated so that equilibrium real GDP actually exceeds potential real GDP. Other things being equal, which of the following is likely to occur in the overheated U.S. economy? a. Wages and other input prices will increase
- Explain what happens to the official measure of GDP in each of the following situations. a. Air quality improves significantly throughout the US but there are no effects on aggregate production or on
- Assume the economy is in short-run equilibrium at a real GDP above its potential real GDP. According to classical theory, which of the following policies should be followed? a. The Federal Reserve should use open market operations and buy U.S. government
- assume that actual real GDP is above potential real GDP. draw it on an aggregate supply-aggregate dAssume that actual real GDP is above potential real GDP. Draw it on an aggregate supply-aggregate de
- Suppose that real GDP is less than potential output -- is unemployment above or below its natural rate? How will the economy adjust back to potential output without any government action? The expl
- Knowing that the real business cycle results from fluctuations in the pace of growth of labor productivity and potential GDP, discuss where our economy is positioned within its business cycle. Apply the effects of aggregate supply and aggregate demand in
- If we suppose the equilibrium level of the gross domestic product (GDP) is beyond potential output caused by an increase in aggregate demand (AD). Using neoclassical economics, rank the following stat
- What is growth accounting? To what extent have increases in U.S. real GDP resulted from more labor inputs? From greater labor productivity? Rearrange the following contributors to the growth of productivity in order of their quantitative importance: econo
- A decrease in business investment demand causes the equilibrium real GDP to fall below potential real GDP. According to the classical model for macroeconomic equilibrium, a. there will be no effect on nominal wages. b. there will be no effect on aggregate
- In the short run, what is the impact on the price level and real GDP of an adverse supply shock?
- Consider an economy that is operating at the full-employment level of real GDP. Assuming the MPC is 0.90, predict the effect on the economy of a $50 billion increase in government spending balanced by a $50 billion increase in taxes.
- In the short run (intermediate range) of the aggregate supply curve, higher aggregate demand will increase: A. the price level but reduce real GDP. B. real GDP without raising the price level. C. the price level without affecting real GDP. D. both the
- Employ the aggregate demand and supply model for the Australian economy, to analyse the consequences for real GDP and the general price level of the following scenarios. Confine your analysis to the short-run. In your response clearly state your assumptio
- What are effects of inflation? What/How actual potential gdp related to unemployment?What are effects of inflation? What/How actual potential GDP related to unemployment?
- Suppose the economy is producing below potential GDP. Which of the following best describes the automatic adjustment to the long-run? a) wages and input prices increase and aggregate supply decreas
- What does the Solow model say about the effect of labor force growth on growth in GDP and per capita GDP?
- The potential GDP is equal to the real GDP at its equilibrium and there is no inflationary or recessionary gap. Briefly explain what this means for movements in the money wage rate (nominal wages) as the economy moves from its short-run macroeconomic equi
- Suppose the economy is operating at potential GDP when it experiences an increase in export demand. How might the economy increase the production of exports to meet this demand, given that the economy is already at full employment?
- Suppose the economy is operating at potential GDP when it experiences an increase in export demand. How might the economy increase production of exports to meet this demand, given that the economy is already at full employment?
- Equilibrium GDP in the short run is determined at the point where A. gross domestic production equals aggregate demand. B. domestic production equals domestic consumption. C. imports equal exports. D. the rate of unemployment equals zero.
- What will happen to real GDP if autonomous spending rises and the economy is operating in the horizontal section of the Keynesian aggregate supply curve? Explain your answer.
- If the economy is near full employment, a short-run increase in the gross domestic product (GDP) will: a. lead to a fall in the aggregate price level. b. lead to a rise in the aggregate price level. c. lead to a fall in wage rates. d. have no effect on th
- A large increase in aggregate demand in an overheated economy will tend to a. dramatically increase real GDP. b. increase nominal GDP. c. reduce real GDP. d. decrease nominal GDP.
- Suppose the economy is in an SRAS-induced recession. Use the AD/AS model to illustrate and discuss the impact on inflation and real GDP, in the short run and long run.
- Along the classical or vertical range of the aggregate supply curve, a decrease in the aggregate demand curve will decrease which of the following? a. both the price level and real GDP b. only real GDP c. only the price level d. neither real GDP nor the p
- Assume that the Real GDP for an economy is $7500 and consumption is $6750. What is total savings in this economy? What is the marginal propensity to consume? What is the marginal propensity to save?
- On the long-run aggregate supply curve, A. a decrease in the price level decreases the level of potential GDP. B. a decrease in the price level increases the aggregate quantity of actual real GDP. C. a decrease in the price level decreases the aggregate q
- If aggregate demand shifts left, then in the short run a. the price and real GDP both fall. b. the price level rises and real GDP falls. c. the price level and real GDP both rise. d. the price lev
- Assume that a hypothetical economy with an MPC of 0.8 is experiencing a boom with the gap of 40 billion between potential real GDP and actual real GDP. (a) How much would the government spending have to fall to decrease real GDP to the potential real GDP
- The long-run aggregate supply curve can be thought of as the: a) level of output for which real GDP equals nominal GDP. b) level of output that the nation is currently producing. c) level of real GDP associated with a constant price level. d) full-employm
- Diagrammatically show and explain the short-run effect of an increase in wage rates on the price level and real GDP.
- Starting from an above full employment equilibrium, briefly explain with the aid of a diagram, the short-run effect on the price level and real GDP of an open market purchase of securities by the central bank. Does such an action lower real GDP in the lon
- If the aggregate demand curve and the aggregate supply curve intersect at a level of real GDP less than potential GDP, which of the following would occur? A) A recessionary gap B) An inflationary gap
- How does marginal propensity to consume affect aggregate expenditure and real GDP?
- During the Great Recession, real gross domestic product (GDP) decreased and unemployment increased, yet the price level did not change much at all. Using the aggregate demand and aggregate supply mode
- Suppose 5 workers work an average of 20,000 hours a year. Their productivity is $40 an hour. What is the real GDP in this economy? a. $400,000 b. $4 million c. $400 million d. $4 billion
- Explain the difference between real and nominal GDP. Does GDP accurately reflect our nation's productivity? Why or why not?
- Assume that full-employment real GDP is Y = $1,200 billion, the current equilibrium real GDP is Y = $1,600 billion, and the MPC = 0.8. To bring the economy to a full-employment real GDP, _____.
- Describe the relationship between real GDP and productivity.
Explore our homework questions and answers library
Browse
by subject