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What is equilibrium GDP?
In the short run, equilibrium GDP is the level of output at which output and aggregate expenditure are equal
Assume the US economy is in short-run equilibrium with a price level of 150 and output of 6 billion The money m What is the impact of the Federal Reserve's policy on the equilibrium interest rate?
It Falls
What is hysteresis in economics?
It is a situation in business cycle where the long run equilibrium depends on the path followed in short run. For example, shift in labor supply curve in short run due to economic shocks causes wages to rise. Even after the economy stabilises the tendency of wages not to fall is described as hysteresis.(rchekurir@yahoo.co.in)
Does Economies have a self correcting mechanism for inflationary and recessionary gaps Expain?
Yes they do. In an inflationary gap the equilibrium with the aggregate demand and the short run aggregate supply curves is higher than the long run aggregate supply curve. Eventually, the short run aggregate supply curve will slowly move to the left towards equilibrium. Output in an inflationary gap cannot be held up. This is not usually allowed, usually monetary and fiscal policies work to move the aggregate demand. In a recessionary gap, the opposite will happen. The short run aggregate supply curve will move to the right slowly towards equilibrium because the natural rate of unemployment is higher than the actual rate of unemployment so people will be willing to work for less.
What will happen to the equilibrim price level and real GDP if aggregate demand and aggregate supply both increase?
If aggregate demand increases at every price level than the demand curve shifts to the right. In the short-run the new equilibrium forms from an increase in willingness to spend, thus higher prices and higher real GDP or quantity of output. If short-run aggregate supply increases at every price level than the supply curve shifts to the right. From the short-run to the long-run the new equilibrium forms from an increase willingness to sell, thus prices reduce to original equilibrium and output increases further. Recap: Prices stay constant while real GDP or total quantity of output increases.
When is the market in short run equilibrium?
When the sellers and buyers agree on a price, and the price is stable, in the short run.
What is equilibrium GDP?
In the short run, equilibrium GDP is the level of output at which output and aggregate expenditure are equal
Assume the US economy is in short-run equilibrium with a price level of 150 and output of 6 billion The money m What is the impact of the Federal Reserve's policy on the equilibrium interest rate?
It Falls
What is hysteresis in economics?
It is a situation in business cycle where the long run equilibrium depends on the path followed in short run. For example, shift in labor supply curve in short run due to economic shocks causes wages to rise. Even after the economy stabilises the tendency of wages not to fall is described as hysteresis.(rchekurir@yahoo.co.in)
What generalizations about an equilibrium constant can be made if the value for K is large?
It will take a short time to reach equilibrium It will take a long time to reach equilibrium The equilibrium lies to the right The equilibrium lies to the left Two of these One of those answers...
Does Economies have a self correcting mechanism for inflationary and recessionary gaps Expain?
Yes they do. In an inflationary gap the equilibrium with the aggregate demand and the short run aggregate supply curves is higher than the long run aggregate supply curve. Eventually, the short run aggregate supply curve will slowly move to the left towards equilibrium. Output in an inflationary gap cannot be held up. This is not usually allowed, usually monetary and fiscal policies work to move the aggregate demand. In a recessionary gap, the opposite will happen. The short run aggregate supply curve will move to the right slowly towards equilibrium because the natural rate of unemployment is higher than the actual rate of unemployment so people will be willing to work for less.
What will happen to the equilibrim price level and real GDP if aggregate demand and aggregate supply both increase?
If aggregate demand increases at every price level than the demand curve shifts to the right. In the short-run the new equilibrium forms from an increase in willingness to spend, thus higher prices and higher real GDP or quantity of output. If short-run aggregate supply increases at every price level than the supply curve shifts to the right. From the short-run to the long-run the new equilibrium forms from an increase willingness to sell, thus prices reduce to original equilibrium and output increases further. Recap: Prices stay constant while real GDP or total quantity of output increases.
What is evolution that occurs in short rapid bursts?
Punctuated equilibrium
What is a model of evolution in which short periods of drastic changes in species are separated by long periods of little or no change?
Punctuated Equilibrium, I believe is the answer.
Conditions of firm's equilibrium?
A firm is in equilibrium when it has no propensity to modify its level of productivity. It requires neither extension nor retrenchment. It wants to earn maximum profits in by equating its marginal cost with its marginal revenue, i.e. MC = MR. Diagrammatically, the conditions of equilibrium of the firm are (1) the MC curve must equal the MR curve.This is the first order and essential condition. But this is not a sufficient condition which may be fulfilled yet the firm may not be in equilibrium. (2) The MC curve must cut the MR curve from below and after the point of equilibrium it must be above the MR.This is the second order condition. Under conditions of perfect competition, the MR curve of a firm overlaps with the AR curve. The MR curve is parallel to the X axis. Hence the firm is in equilibrium when MC = MR = AR.The first order figure (1), the MC curve cuts the MR curve first at point X. It contends the condition of MC = MR, but it is not a point of maximum profits for the reason that after point X, the MC curve is beneath the MR curve. It does not pay the firm to produce the minimum output OM when it can earn huge profits by producing beyond OM. Point Y is of maximum profits where both the situations are fulfilled.Amidst points X and Y it pays the firm to enlarges its productivity for the reason that it's MR > MC. It will nevertheless stop additional production when it reaches the OM1 level of productivity where the firm fulfils both the circumstances of equilibrium. If it has any plants to produce more than OM1 it will be incurring losses, for its marginal cost exceeds its marginal revenue beyond the equilibrium point Y. The same finale hold good in the case of straight line MC curve and it is presented in the figure (2).An industry is in equilibrium, first when there is no propensity for the firms either to leave or either the industry and next, when each firm is also in equilibrium. The first clause entails that the average cost curves overlap with the average revenue curves of all the firms in the industry.They are earning only normal profits, which are believed to be incorporated in the average cost curves of the firms. The second condition entails the equality of MC and MR. Under a perfectly competitive industry these two circumstances must be fulfilled at the point of equilibrium i.e. MC = MR…. (1), AC = AR…. (2), AR = MR. Hence MC = AC = AR. Such a position represents full equilibrium of the industry.Short Run Equilibrium of the Firm and IndustryShort Run Equilibrium of the FirmA firm is in equilibrium in the short run when it has no propensity to enlarge or contract its productivity and needs to earn maximum profit or to incur minimum losses.The short run is an epoch of time in which the firm can vary its productivity by changing the erratic factors of production. The number of firms in the industry is fixed since neither the existing firms can leave nor new firms can enter it.PostulationsAll firms use standardised factors of productionFirms are of diverse competenceCost curves of firms are dissimilar from each otherAll firms sell their produces at the equal price ascertained by demand and supply of the industry so that the price of each firm, P (Price) = AR = MRFirms produce and sell various volumesThe short run equilibrium of the firm can be described with the helps of marginal study and total cost revenue study.Marginal Cost, Marginal Revenue analysis - During the short run, a firm will produce only its price equals average variable cost or is higher than the average variable cost (AVC). Furthermore, if the price is more than the averages total costs, ATC, i.e. P = AR > ATC the firm will be earning super normal profits. If price equals the average total costs, i.e. P = AR = ATC the firm will be earning normal profits or break even.If price equals AVC, the firm will be incurring losses. If price drops even a little below AVC, the firm will shut down since in order to produce it must cover atleast it's AVC through short run. So during the short run, under perfect competition, affirm is in equilibrium in all the above mentioned stipulations.Super normal profits - The firm will be earning super normal profits in the short run when price is higher than the short run average cost.Normal Profits = The firm may earn normal profits when price equals the short run average costs.Total Cost - Total Revenue Analysis - The short run equilibrium of the firm can also be represented with the help of total cost and total revenue curves. The firm is able to maximise its profits when the positive discrimination between TR and TC is the greatest.Short Run Equilibrium of the IndustryAn industry is in equilibrium in the short run when its total output remains steady there being no propensity to enlarge or contract its productivity. If all firms are in equilibrium the industry is also in equilibrium. For full equilibrium of the industry in the short run all firms must be earning normal profits.But full equilibrium of the industry is by sheer accident for the reason that in the short rum some firms may be earning super normal profits and some losses. Even then the industry is in short run equilibrium when its quantity demanded and quantity supplied is equal at the price which clears the market.
What does a decrease in Aggregate demand mean starting from long-run equilibrium?
No
The economy is in short-run equilibrium a. At any point on the IS curve b. Only at a point that is on both the IS and LM curves c. At any point on the LM curve. d. Only at the natural level of?
b
