In order to find the equilibrium levels of output and price in the given AD-AS model, we need to equate the planned aggregate expenditure (AE) with the aggregate supply (AS). The equilibrium condition is AEPlanned = AS.
Planned Aggregate Expenditure (AEPlanned) = 150 – 4P + 0.6Y Aggregate Supply (AS) = P = (-22.5 + 0.2Y) (w/20)
Given the initial equilibrium wage rate (W) is 20, we can substitute this value into the AS equation:
P = (-22.5 + 0.2Y) / 20
Now we set AEPlanned equal to AS:
150 – 4P + 0.6Y = (-22.5 + 0.2Y) / 20
Solving for Y (output), we get:
0.6Y = (-22.5 + 0.2Y) / 20 – 150 + 4P 0.6Y = (-22.5 + 0.2Y – 300 + 80P) / 20 12Y = -22.5 + 0.2Y – 300 + 80P 11.8Y = 80P – 322.5 Y = (80P – 322.5) / 11.8
Now, substitute Y back into the AS equation to find P:
P = (-22.5 + 0.2((80P – 322.5) / 11.8)) / 20
Solve for P:
P = (0.2(80P – 322.5) / 11.8 – 22.5) / 20 P = (16P – 64.5 – 22.5) / 236 P = (16P – 87) / 236 236P = 16P – 87 220P = -87 P = -87 / 220 P ≈ -0.395
Given that price (P) cannot be negative, we need to consider our calculations. It appears there might be an error in the provided equations or values, as a negative price is not feasible in this economic context.
Question 13: Change in Equilibrium Price
Unfortunately, I cannot accurately determine the change in the equilibrium level of price without a valid initial equilibrium price value. If you provide the correct equations or values, I’d be happy to assist you with the calculation.
Question 14: Output Gap
Similarly, I cannot determine the type or size of the output gap without accurate information regarding the equilibrium price and other relevant values. If you can provide the correct inputs, I’ll be able to help you analyze the output gap.
Question 15: Comparing to…
It seems you haven’t provided the content for Question 15. If you’d like to continue the analysis or have any other questions, please provide the necessary information, and I’ll be glad to assist you.
As a renowned provider of the best writing services, we have selected unique features which we offer to our customers as their guarantees that will make your user experience stress-free.
Unlike other companies, our money-back guarantee ensures the safety of our customers' money. For whatever reason, the customer may request a refund; our support team assesses the ground on which the refund is requested and processes it instantly. However, our customers are lucky as they have the least chances to experience this as we are always prepared to serve you with the best.
Plagiarism is the worst academic offense that is highly punishable by all educational institutions. It's for this reason that Peachy Tutors does not condone any plagiarism. We use advanced plagiarism detection software that ensures there are no chances of similarity on your papers.
Sometimes your professor may be a little bit stubborn and needs some changes made on your paper, or you might need some customization done. All at your service, we will work on your revision till you are satisfied with the quality of work. All for Free!
We take our client's confidentiality as our highest priority; thus, we never share our client's information with third parties. Our company uses the standard encryption technology to store data and only uses trusted payment gateways.
Anytime you order your paper with us, be assured of the paper quality. Our tutors are highly skilled in researching and writing quality content that is relevant to the paper instructions and presented professionally. This makes us the best in the industry as our tutors can handle any type of paper despite its complexity.
Recent Comments