A(n) ________ is a private nonprofit financial institution that will make small loans to its members for the purpose of starting a business.
The slope and position of the long-run aggregate supply curve
Suppose the Fed doubles the growth rate of the quantity of money in the economy. In the long run, the increase in money growth will change which of the following? Check all that apply.
__ The quantity of physical capital
__ The price level
__ The inflation rate
__ The size of the labor force
Suppose the economy produces real GDP of $50 billion when unemployment is at its natural rate.
(graph goes here)
Suppose the government passes a law that reduces unemployment benefits in a way that causes unemployed workers to seek out new jobs more quickly. The policy will cause the natural rate of unemployment to (rise / fall) which will:
__ Shift the long-run aggregate supply curve to the left
__ Shift the long-run aggregate supply curve to the right
__ Not affect the long-run aggregate supply curve
In the following table, determine how each event affects the position of the long-run aggregate supply (LRAS) curve.
Direction of LRAS Curve Shift:
Many workers leave to pursue more lucrative careers in foreign economies. (Left / No Shift/ Right)
For environmental and safety reasons, the government requires that the country's nuclear (Left / No Shift/ Right)
power plants be permanently shut down. (Left / No Shift/ Right)
An investment tax credit increases the rate at which firms acquire machinery and equipment. (Left / No Shift/ Right)
Suppose the Fed doubles the growth rate of the quantity of money in the economy. In the long run, the increase in money growth will change which of the following? Check all that apply.
1). The level of technological knowledge
2). The price level
3). The size of the labor force
4). The quantity of physical capital
Explanation:The Federal Reserve System is United States of America of central banking system. The Fed doubles the quantity of money growth rate in the economy. In the long run, the increase in money growth will change the price level and/or a change in supply of goods and services
Suppose the government passes a law that significantly increases the minimum wage. The policy will cause the natural rate of unemployment to rise, which will:
1). Shift the long-run aggregate supply curve to the right
2). Shift the long-run aggregate supply curve to the left
3). Not affect the long-run aggregate supply curve
The minimum wage is the lowest monthly or hourly remuneration that employers are legally allowed to pay their workers. The minimum wage acts like a tax on businesses. The aggregate supply curve shifts to the left, as the price of key inputs rises. Therefore it makes a combination of lower output, higher unemployment, and higher inflation.
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An increased money supply would raise the price level and inflation, but wouldn't alter physical capital or labor force size. Lower unemployment benefits would reduce unemployment and shift the long-run aggregate supply curve rightward. Event-driven shifts in LRAS curve are dictated by changes in labor force and capital.
If the Fed doubles the growth rate of the quantity of money in the economy, it will not impact the quantity of physical capital or the size of the labor force. However, there would likely be an increase in the price level and the inflation rate, as the increase in money supply would lead to higher prices in the long-run as per the Quantity Theory of Money.If the government passes a law that reduces unemployment benefits causing unemployed workers to seek out new jobs more quickly, the natural rate of unemployment will fall. This policy will likely shift the long-run aggregate supply curve to the right, as the lower unemployment rate means a larger labor force leading to higher potential output.For the shift of LRAS curve: Many workers leaving to pursue careers in foreign economies would shift the curve left, as the labor force decreases; Shutting down nuclear power plants affects capital, hence it would also shift the curve left; an investment tax credit increasing machinery and equipment acquisition rates for firms would shift the curve right, as this would boost capital accumulation.Learn more about Supply Curve here:
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