All categories

3 years ago

If the economy is initially at long-run equilibrium and aggregate demand declines, then in the long run the price level:

Business

1 answer:

ahrayia [7]3 years ago

3 0

Answer:

The correct answer is option c.

Explanation:

In an economy, in the long run, the aggregate supply is fixed. The aggregate supply curve is a vertical line. This is because, in the long run, supply remains unaffected by price level. The increase in product price is balanced by an increase in input prices. So the supply does not change with change in the price level.

In the long run, the supply changes with change in the availability of resources and change in technology. So when the aggregate demand declines, the demand curve shifts to the left. The equilibrium quantity remains the same but the price level declines.

It is also evident in the figure attached.

You might be interested in

The balance shown in the August bank statement of Colt Company was $22,400. After examining the August bank statement and items

a_sh-v [17]

Answer:

A.$20,200

Explanation:

The computation of the cash amount which should be reported in the balance sheet is shown below:

= August Bank statement balance + Deposits outstanding - Checks outstanding

= $22,400 + $2,300 - $4,500

= $20,200

The other amount which is given in the question is irrelevant. Hence, these items should not be considered in the computation, so they are ignored.

3 0

4 years ago

Read 2 more answers

How would the Security Market Line be affected, other things held constant, if the expected inflation rate decreases and investo

garik1379 [7]

Answer: a. The y-axis intercept would decline, and the slope would increase.

Explanation:

The security market line is simply refered to as the graphical representation of a CAPM which is the capital asset pricing model and it simply shows the market risk, of the securities in the market which is then plotted against the market return.

When the expected inflation rate decreases and the investors also become more risk averse, the Security Market Line would be affected, as the y-axis intercept would decline, and the slope would increase.

8 0

3 years ago

Colleen sold a house to Ben for $300,000. Before selling the House, Colleen forgot to tell Ben about a leaky faucet in a little-

arlik [135]

Answer: Because Y's failure to notice the leaky faucet means that he did not justifiably rely on X's "misstatement."

Explanation: Ben may be unable to rescind on the basis that, upon the sale of the property, the leaky faucet is as not intentionally hidden from Ben's notice. If during the property inspection, the leaky faucet was noticed by Ben, and Colleen gave a false statement about the faucet in other to conceal the impairment, then Colleen would have been deemed to have made Ben rely on a false statement and thus making a rescind by Ben would have been possible.

4 0

3 years ago

A flower shop makes a large sale for $1,500 on June 30th. The customer is sent an invoice on July 5th, and a check is received o

Likurg_2 [28]

Answer:

June 30

Explanation:

According to the revenue recognition principle, the transaction should be recorded in the books of accounts when the sale is made. It records that revenue which is earned and the possibility of the receipt of cash should be high.

It records that when the product and services are sold to the customer and in return customer received it. Whether the payment received later but the sale is made.

So, on June 30, the revenue should be recognized.

6 0

3 years ago

a landscape archetiect is hired to build a garden which is of the shape of a right traingle. suppose the architech wants to use

vlabodo [156]

Answer:

Maximum Ares architect can build is 36,450 $ft^{2}$

Explanation:

Suppose

The Perpendicular of the triangle = l

The Base of the triangle = b

The hypotenuse of the triangle = h

The hypotenuse of the triangle can be calculated as follow

h = $\sqrt{l^{2} b^{2} }$

Total Budget = $1,620

As the architect does not want to build anything on the hypotenuse of the triangle area.

So as per given condition

( $9 x l ) + ( $3 x b ) = $1,620

$3 ( 3l + b ) = $1,620

3l + b = $1,620 / $3

3l + b = 540

b = 540 - 3l ...........(1)

Area = 1/2 x l x b

using (1) we will have

Area = 1/2 x l x ($540 - 3l)

Now differentiating w.r.t l

$\frac{d(area)}{dl}$ = $\frac{\frac{1}{2} [ 540l - 3l^{2}] }{dl}$

0 = $\frac{1}{2} [ 540 - 6l] }$

0 = 540 - 6l

6l = 540

l = 540/6

l = 90 ft

Placing value of l in (1)

b = 540 - 3(90)

b = 540 - 270

b = 270

So, Maximum area will be calculated as follow

Maximum Ares = $\frac{1}{2}$ x 270 x 270

Maximum Ares = 36,450 $ft^{2}$

7 0

3 years ago