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8. Problems and Applications Q2
Indicate whether each of the following events will increase, decrease, or have no effect on long-
run aggregate supply.
Event
Effect on Long-Run Aggregate Supply
Increase
Decrease
No EffectThe United States experiences a wave of immigration.
Congress raises the minimum wage to $10 per hour.
Intel invents a new and more powerful computer chip.
A severe hurricane damages factories along the East Coast.
8. Problems and Applications Q2
Indicate whether each of the following events will increase, decrease, or have no effect on long-
run aggregate supply.
Event
Effect on Long-Run Aggregate Supply
Increase
Decrease
No EffectThe United States experiences a wave of immigration.
Congress raises the minimum wage to $10 per hour.
Intel invents a new and more powerful computer chip.
A severe hurricane damages factories along the East Coast.
Indicate whether each of the following events will increase, decrease, or have no effect on long-
run aggregate supply.
Event
Effect on Long-Run Aggregate Supply
Increase
Decrease
No EffectThe United States experiences a wave of immigration.
Congress raises the minimum wage to $10 per hour.
Intel invents a new and more powerful computer chip.
A severe hurricane damages factories along the East Coast.
Indicate whether each of the following events will increase, decrease, or have no effect on long-
run aggregate supply.
Event
Effect on Long-Run Aggregate Supply
Increase
Decrease
No EffectThe United States experiences a wave of immigration.
Congress raises the minimum wage to $10 per hour.
Intel invents a new and more powerful computer chip.
A severe hurricane damages factories along the East Coast.
Indicate whether each of the following events will increase, decrease, or have no effect on long-
run aggregate supply.
Event
Effect on Long-Run Aggregate Supply
Increase
Decrease
No EffectThe United States experiences a wave of immigration.
Congress raises the minimum wage to $10 per hour.
Intel invents a new and more powerful computer chip.
A severe hurricane damages factories along the East Coast.
Indicate whether each of the following events will increase, decrease, or have no effect on long-
run aggregate supply.
Event
Effect on Long-Run Aggregate Supply
Increase
Decrease
No EffectThe United States experiences a wave of immigration.
Congress raises the minimum wage to $10 per hour.
Intel invents a new and more powerful computer chip.
A severe hurricane damages factories along the East Coast.
Indicate whether each of the following events will increase, decrease, or have no effect on long-
run aggregate supply.
Event
Effect on Long-Run Aggregate Supply
Increase
Decrease
No EffectThe United States experiences a wave of immigration.
Congress raises the minimum wage to $10 per hour.
Intel invents a new and more powerful computer chip.
A severe hurricane damages factories along the East Coast.
Indicate whether each of the following events will increase, decrease, or have no effect on long-
run aggregate supply.
Event
Effect on Long-Run Aggregate Supply
Increase
Decrease
No Effect
Event
Effect on Long-Run Aggregate Supply
Increase
Decrease
No EffectThe United States experiences a wave of immigration.
Congress raises the minimum wage to $10 per hour.
Intel invents a new and more powerful computer chip.
A severe hurricane damages factories along the East Coast.
Solution
When the United States experiences a wave of immigration, the labor force increases, so long-
run aggregate supply increases as there are more people who can produce output.
=====================================================================
=====
b. When Congress raises the minimum wage to $10 per hour, the natural rate of
unemployment rises, so the long-run aggregate-supply curve shifts to the left.
=====================================================================
=====
c. When Intel invents a new and more powerful computer chip, productivity increases, so
long-run aggregate supply increases as more output can be produced with the same inputs.
=====================================================================
=====
d. When a severe hurricane damages factories along the East Coast, the capital stock is
smaller, so long-run aggregate supply declines

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8. Problems and Applications Q2Indicate whether each.pdf

  • 1. 8. Problems and Applications Q2 Indicate whether each of the following events will increase, decrease, or have no effect on long- run aggregate supply. Event Effect on Long-Run Aggregate Supply Increase Decrease No EffectThe United States experiences a wave of immigration. Congress raises the minimum wage to $10 per hour. Intel invents a new and more powerful computer chip. A severe hurricane damages factories along the East Coast. 8. Problems and Applications Q2 Indicate whether each of the following events will increase, decrease, or have no effect on long-
  • 2. run aggregate supply. Event Effect on Long-Run Aggregate Supply Increase Decrease No EffectThe United States experiences a wave of immigration. Congress raises the minimum wage to $10 per hour. Intel invents a new and more powerful computer chip. A severe hurricane damages factories along the East Coast. Indicate whether each of the following events will increase, decrease, or have no effect on long- run aggregate supply. Event Effect on Long-Run Aggregate Supply Increase Decrease No EffectThe United States experiences a wave of immigration. Congress raises the minimum wage to $10 per hour. Intel invents a new and more powerful computer chip.
  • 3. A severe hurricane damages factories along the East Coast. Indicate whether each of the following events will increase, decrease, or have no effect on long- run aggregate supply. Event Effect on Long-Run Aggregate Supply Increase Decrease No EffectThe United States experiences a wave of immigration. Congress raises the minimum wage to $10 per hour. Intel invents a new and more powerful computer chip. A severe hurricane damages factories along the East Coast. Indicate whether each of the following events will increase, decrease, or have no effect on long- run aggregate supply. Event Effect on Long-Run Aggregate Supply
  • 4. Increase Decrease No EffectThe United States experiences a wave of immigration. Congress raises the minimum wage to $10 per hour. Intel invents a new and more powerful computer chip. A severe hurricane damages factories along the East Coast. Indicate whether each of the following events will increase, decrease, or have no effect on long- run aggregate supply. Event Effect on Long-Run Aggregate Supply Increase Decrease No EffectThe United States experiences a wave of immigration. Congress raises the minimum wage to $10 per hour. Intel invents a new and more powerful computer chip. A severe hurricane damages factories along the East Coast.
  • 5. Indicate whether each of the following events will increase, decrease, or have no effect on long- run aggregate supply. Event Effect on Long-Run Aggregate Supply Increase Decrease No EffectThe United States experiences a wave of immigration. Congress raises the minimum wage to $10 per hour. Intel invents a new and more powerful computer chip. A severe hurricane damages factories along the East Coast. Indicate whether each of the following events will increase, decrease, or have no effect on long- run aggregate supply. Event Effect on Long-Run Aggregate Supply Increase Decrease No Effect
  • 6. Event Effect on Long-Run Aggregate Supply Increase Decrease No EffectThe United States experiences a wave of immigration. Congress raises the minimum wage to $10 per hour. Intel invents a new and more powerful computer chip. A severe hurricane damages factories along the East Coast. Solution When the United States experiences a wave of immigration, the labor force increases, so long- run aggregate supply increases as there are more people who can produce output. ===================================================================== ===== b. When Congress raises the minimum wage to $10 per hour, the natural rate of unemployment rises, so the long-run aggregate-supply curve shifts to the left. ===================================================================== ===== c. When Intel invents a new and more powerful computer chip, productivity increases, so long-run aggregate supply increases as more output can be produced with the same inputs. ===================================================================== ===== d. When a severe hurricane damages factories along the East Coast, the capital stock is
  • 7. smaller, so long-run aggregate supply declines