Scribd Logo
Upload

Welcome to Scribd!

  • 13 views

    Price Level: Sras 1 2

    Uploaded by

    mong
    An increase in labour productivity leads to a rightward shift in the short-run aggregate supply curve (SRAS), lowering the equilibrium price level and raising real GDP. A depreciation of the Ringgit increases net exports, shifting the aggregate demand curve right and raising both the price level and real GDP. When BNM raises interest rates to reduce inflation, it lowers aggregate demand by making borrowing less attractive, shifting the AD curve left and reducing both the price level and real GDP.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content

    You might also like

    Price Level: Sras 1 2

    Uploaded by

    mong
    13 views1 page
    An increase in labour productivity leads to a rightward shift in the short-run aggregate supply curve (SRAS), lowering the equilibrium price level and raising real GDP. A depreciation of the Ringgit increases net exports, shifting the aggregate demand curve right and raising both the price level and real GDP. When BNM raises interest rates to reduce inflation, it lowers aggregate demand by making borrowing less attractive, shifting the AD curve left and reducing both the price level and real GDP.

    Original Description:

    Economy

    Original Title

    Eco Q4

    Copyright

    © © All Rights Reserved

    Available Formats

    DOCX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Report this Document
    An increase in labour productivity leads to a rightward shift in the short-run aggregate supply curve (SRAS), lowering the equilibrium price level and raising real GDP. A depreciation of the Ringgit increases net exports, shifting the aggregate demand curve right and raising both the price level and real GDP. When BNM raises interest rates to reduce inflation, it lowers aggregate demand by making borrowing less attractive, shifting the AD curve left and reducing both the price level and real GDP.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as docx, pdf, or txt
    13 views1 page

    Price Level: Sras 1 2

    Uploaded by

    mong
    An increase in labour productivity leads to a rightward shift in the short-run aggregate supply curve (SRAS), lowering the equilibrium price level and raising real GDP. A depreciation of the Ringgit increases net exports, shifting the aggregate demand curve right and raising both the price level and real GDP. When BNM raises interest rates to reduce inflation, it lowers aggregate demand by making borrowing less attractive, shifting the AD curve left and reducing both the price level and real GDP.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as docx, pdf, or txt
    of 1

    4.

    Using the aggregate demand and aggregate supply (AD-SRAS) diagram, explain what will
    happen to the equilibrium price level and Real GDP when each of the following events
    occurs:
    (i) A depreciation of Ringgit Malaysia (RM)

    Price level
    SRAS 1 Depreciation of Ringgit Malaysia cause the net export
    E2 growth which leads to increase in real GDP and price
    P2 E1 level. The equilibrium price level increase from P1 to
    P1
    AD 2 P2 and the aggregate demand of real GDP increase from
    AD 1 Q1 to Q2. This causes the aggregate demand curve shift
    Q1 Q 2 Real GDP rightward from AD1 to AD2.

    (i) An increase in labour productivity

    Price level
    SRAS 1
    SRAS 2
    An increase in labour productivity will help the factory
    E1 or business able to produce more outputs in the market.
    P1 E2 The equilibrium price level falls from P1 to P2 and the
    P2
    aggregate supply of real GDP increase from Q1 to Q2.
    AD 1
    Therefore, the short-run aggregate supply curve to shift
    Real GDP
    Q1 Q2 rightward from SRAS1 to SRAS2.

    (ii) Bank Negara Malaysia


    (BNM) announced a raise in interest rate to reduce inflation.

    Price level Bank Negara Malaysia (BNM) announce a raise in


    SRAS 1 interest to reduce inflation will cause less people want to
    borrow loan from BNM because they not willing to pay
    E1
    P1 high interest. The equilibrium price level falls from P1 to
    E2
    P2 P2 and the aggregate demand of real GDP decrease from
    AD 1 Q1 to Q2. This causes the aggregate demand curve shift
    AD 2
    Q1
    Real GDP leftward from AD1 to AD2.
    Q2

    You might also like