An Aggregate-Supply (AS)curve Is Described by the Equation Y =

question 201

Essay

An aggregate-supply (AS)curve is described by the equation Y = YLR + a × (P - PEXP),where Y is current output,YLR is the long run level of output,a is a positive constant,P is the current price level,and PEXP is the expected price level.Suppose YLR = 50,a = 1,and PEXP = 40.
a. Draw the long-run aggregate-supply curve in an AD - AS (aggregate demand - aggregate supply) diagram.
b. Using the AS equation, find the output corresponding to price levels P = 40 and P = 80 and place the 2 points on your diagram. Draw the short-run AS curve that passes through the two points.
c. Identify the expected price level on your graph.
d. Suppose the expected price level decreases to PEXP = 30. For current price levels P = 40 and P = 60, recalculate the output levels using the AS formula. Draw the new AS curve and identify the new expected price level.

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Definitions:

Parental Responsiveness

The extent to which parents respond to their child's needs in a sensitive and supportive manner.

Acceptance

An aspect of parental responsiveness that includes being affectionate, praising the child, being involved in the child’s life, and showing concern for the child’s needs; correlated with children’s self-esteem and social adjustment.

Demandingness

The degree to which parents or guardians expect and require responsible, mature behavior from their children.

Moderately Achievement Oriented

Refers to an individual's tendency to aspire for success and accomplishment in tasks with a balanced level of ambition and realism.