Answer:
attached below
Explanation:
Given that the economy has its actual GDP > potential GDP
<u>A) using AD-AS to depict the situation </u>
attached below is the graph
The gap( Lf - L1 ) is called <em>inflationary gap </em>
x-axis <em>= </em>real GDP , Y-axis = price level,
AD = aggregate demand curve , S = short run aggregate supply curve
L = long run aggregate supply curve,
B) In the long run the<em> graph </em>will adjust to the full employment level
attached below is the graph
It depends on which way it goes. If the supply increases and prices stay the same, the disposable income increases in a meaningful way. That condition will cause the Fed either to raise interest rates, or the price of goods will respond to the increased demand or a third alternative could be that manufacturers will increase production (not very likely but it could happen).
If the supply of money decreases (by people being laid off for example) then the opposite of all the events listed above will or can occur. The fed could become more accommodating and lower interest rates. The price of good will decrease unless manufacturers increase their inventory (which not really healthy for an economy) or they could decrease production which will further decrease the labor force which will put the economy in an endless vicious cycle -- one no one wants.
Answer:
How does voluntary exchange help set prices in a market economy?
Voluntary exchange enables fluctuation in prices and makes it to be vary in the market system, this uncontrolled prices enables customers to buy same goods at different prices because each supplier sells at any convenient prices that suits them not adding both variable cost and fixed cost to determine the price.
Explanation:
Answer: False
Explanation:
Risk mitigation simply has to do with the strike that are taken by an economic agent such as an individual, firm or the government in order to prevent risk and reduce it to its minimal level.
It should be noted that risk mitigation is identical for every organization as the same process is being followed. Therefore, the question is false.
The limits of the terms of trade are determined by the comparative cost conditions in each country before trade:
Less commerce occurs as a result of partial specialization and rising costs than when costs are constant. The cost advantage one country has over another serves as the foundation for commerce. This explains why some countries make things that they also import since they are able to do so for less money than their trading partners.
What is comparative cost ?
Comparative costs refers to comparing, using a comparative costs approach, the costs of signing into a privatized contract to the expenses of the state maintaining to provide the services that are the subject of the contract.
Therefore,
Less commerce occurs as a result of partial specialization and rising costs than when costs are constant. The cost advantage one country has over another serves as the foundation for commerce. This explains why some countries make things that they also import since they are able to do so for less money than their trading partners.
To learn more about comparative cost from the given link:
brainly.com/question/8141905
