Comments on: Economics question! Help!? http://hurricanequestions.com/economics-question-help.htm Sun, 20 May 2012 18:28:26 +0000 http://wordpress.org/?v=2.7.1 hourly 1 By: Hubris252 http://hurricanequestions.com/economics-question-help.htm/comment-page-1#comment-12907 Hubris252 Mon, 30 Aug 2010 14:24:23 +0000 http://hurricanequestions.com/economics-question-help.htm#comment-12907 All answers are in the context of the LRAS-SRAS-AD model: A. no effect: immigration will shift the SRAS curve to the right, reduced wages will shift AD curve to the left, returning to LRAS equilibrium at a lower price level B. no effect: higher wages initially mean increased purchasing power which shifts AD to the right but higher price of labor shifts SRAS curve to the left, returning to the LRAS equilibrium at a higher price level. C. Increase: technological improvements increase the productive capacity of the economy, shifting both LRAS and SRAS to the right. labor that is more productive will earn higher wages shifting the AD curve to the right. if the shifts in the short run curves are in proportion to each other their will be no change in the price level, just fyi. D. No effect on LRAS: the SRAS and AD curves will both shift to the left and the economy will operate at a short-run equilibrium until the factories are repaired. ADDITION: I spoke to one of my professors today and he said that some would interpret this as a temporary decrease in LRAS because of the widespread effect of capital destruction. All answers are in the context of the LRAS-SRAS-AD model:

A. no effect: immigration will shift the SRAS curve to the right, reduced wages will shift AD curve to the left, returning to LRAS equilibrium at a lower price level

B. no effect: higher wages initially mean increased purchasing power which shifts AD to the right but higher price of labor shifts SRAS curve to the left, returning to the LRAS equilibrium at a higher price level.

C. Increase: technological improvements increase the productive capacity of the economy, shifting both LRAS and SRAS to the right. labor that is more productive will earn higher wages shifting the AD curve to the right. if the shifts in the short run curves are in proportion to each other their will be no change in the price level, just fyi.

D. No effect on LRAS: the SRAS and AD curves will both shift to the left and the economy will operate at a short-run equilibrium until the factories are repaired. ADDITION: I spoke to one of my professors today and he said that some would interpret this as a temporary decrease in LRAS because of the widespread effect of capital destruction.

]]> By: thenumberq2 http://hurricanequestions.com/economics-question-help.htm/comment-page-1#comment-12908 thenumberq2 Mon, 30 Aug 2010 14:24:23 +0000 http://hurricanequestions.com/economics-question-help.htm#comment-12908 a) decreases LRAS (since the effects of immigration are only temporary before output falls back below it's natural rate) b) increases LRAS (by increasing incentives for labourers to supply labour) c) decreases LRAS (by increasing the ratio of capital to labour, reducing labour supply) d) increases LRAS (opposite of c) a) decreases LRAS (since the effects of immigration are only temporary before output falls back below it’s natural rate)
b) increases LRAS (by increasing incentives for labourers to supply labour)
c) decreases LRAS (by increasing the ratio of capital to labour, reducing labour supply)
d) increases LRAS (opposite of c)

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