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Loss of Farmland

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Chapter 18 Homework Nyah Leboe

One point questions:

18-1 Distinguish between the short run and the long run as they relate to macroeconomics. Why is the distinction important? Short run is a period of time in which producers are able to change the quantities of some but not all of the resources they employ, a period in which some resources (usually plant) are fixed and some are variable. The long run is a period of time long enough to enable producers of a product to change the quantities of all the resources they employ, period in which all resources and costs are variable and no resources or costs are fixed. The long run because if side for nominal wages and other input prices to change in response to change in a nation’s price level.

18-2 Which of the following statements are true? Which are false? Explain why the false statements are untrue. a. Short-run aggregate supply curves reflect an inverse relationship between the price level and the level of real output. A is false because it said nominal wages and other input prices do not change in response to change in the price level. b. The long-run aggregate supply curve assumes that nominal wages are fixed. B is true c. In the long run, an increase in the price level will result in an increase in nominal wages. C is true.

18-3 Use graphical analysis to show how each of the following would affect the economy first in the short run and then in the long run. Assume that the United States is initially operating at its full-employment level of output, that prices and wages are eventually flexible both upward and downward, and that there is no counteracting fiscal or monetary policy. a. Because of a war abroad, the oil supply to the United States is disrupted, sending oil prices rocketing upward. The graph will remain the same or if will move to 2. b. Construction

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