Question

Answer the following questions on the basis of the three sets of data for the country of North Vaudeville: (A ) ( B ) ( C )
(A) (B) (C)
Price level Real GDP Price level Real GDP Price level Real GDP
110 240 110 290 100 215
100 240 100 265 100 240
95 240 95 240 100 265
90 240 90 215 100 290
a. Which set of data illustrates aggregate supply in the immediate short-run in North Vaudeville?
The data in : ....(A or B or C).
Which set of data illustrates aggregate supply in the short run in North Vaudeville? The data in : .... (B or C or A).
Which set of data illustrates aggregate supply in the long run in North Vaudeville? The data in : .....(A or B or C).
b. Assuming no change in hours of work, if real output per hour of work decreases by 15 percent, what will be the new levels of real GDP in the right column of B?
Instructions: Round your answers to 2 decimal places.
With a price level of 110, new output = .............
With a price level of 100, new output = ............
With a price level of 95, new output = ...............
With a price level of 90, new output = ..........
Does the new data reflect an increase in aggregate supply or does it indicate a decrease in aggregate supply? ............(Decrease or Increase).

Answer 1

Answer:

North Vaudeville

a. Set of data which illustrates aggregate supply

1. in the immediate short-run:

The data in: A

2. in the short run:

The data in:  B

3. in the long run:

The data in:  C

b.                (B)                                New GDP Output

Price level  Real GDP                 Price level   Real GDP

110           290                                   110             246.50

100          265                                  100             225.25

95           240                                   95              204.00

90           215                                   90               182.75

Does the new data reflect an increase in aggregate supply or does it indicate a decrease in aggregate supply? ............Decrease

Explanation:

North Vaudeville

                (A)                                    (B)                                     (C)

Price level   Real GDP      Price level  Real GDP      Price level   Real GDP

       110         240                   110           290                  100           215

      100         240                  100           265                  100          240

       95         240                   95           240                   100          265

      90          240                   90            215                   100          290

b) In the short-run, aggregate supply in North Vaudeville increases as price increases, implying that the real GDP in output terms increases with price increases.

c) In the long-run, aggregate supply in North Vaudeville does not increase with price increases, but it is influenced by other factors of production, like labor, capital, and technology.

d) In the immediate short-run, aggregate supply in North Vaudeville remains constant at different price levels.

Answer 2

North-Va-ud-ev-ille

a. Set of data that illustrates the aggregate supply

1. in the immediate short-run:

The data in: A  

2. in the short run:

The data in: B

3. in the e-long-ate run:

The data in: C

What is Aggregate supply?

b.                (B)                               New GDP Output

Price level  Real GDP                 Price level   Real GDP

110           290                                   110             246.50

100          265                                  100             225.25

95           240                                   95             204.00

90          215                                   90               182.75

Does the new data con-template an increase in aggregate supply or accomplishes it suggest a decrease in aggregate supply? Decrease

North-Va-ud-ev-ille

               (A)                                    (B)                                    (C)

Price level   Real GDP      Price level  Real GDP      Price level   Real GDP

      110        240                   110           290                  100           215

     100         240                  100           265                  100          240

      95         240                   95           240                   100          265

     90          240                   90            215                   100         290

b) In the short-run, aggregate supply in North-Va-ud-ev-ille grows as price increases, suggesting that the real GDP in output terms improves with price increases.

c) In the long-run, aggregate supply in North-Va-ud-ev-ille does not increase with price increases, but it is influenced by other characteristics of production, like struggle, prosperity, and technology.

d) In the immediate short-run, aggregate supply in North remains un-changing at different price levels.

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