is my homework correct? agg supply/demand question. i'll give ya .015btc

[vokain]

usually when i think something is too easy i'm typically wrong, can someone double check me please

http://s24.postimg.org/x78xetjl1/image.jpg

edit: rethinking it, does AD shift right in the "increase in wage rate" graph? price level wouldn't change then
edit2: per the instructions,  S will always be on the LRAS?

[Topazan]

I haven't done too much formal study of economics, so take what I say with a grain of salt.

The instructions tell you to mark the equilibrium with 's'.  The equilibrium is where the supply and demand lines intersect, which may be different from the current price point.  Therefore, I suspect the answers to all four questions involve moving either the supply or demand curve.

Isn't the conventional wisdom that prices are "sticky" in the short term, so an increase in the money supply would be a rightward shift in the demand curve?

I would also expect the rise in wages to shift the supply curve left, reflecting the increased cost of doing business, while the reduction of oil prices would have the opposite effect.

[vokain]

I haven't done too much formal study of economics, so take what I say with a grain of salt.

The instructions tell you to mark the equilibrium with 's'.  The equilibrium is where the supply and demand lines intersect, which may be different from the current price point.  Therefore, I suspect the answers to all four questions involve moving either the supply or demand curve.

That's what I thought at first, but i think  I  was wrong. Why wouldn't a reduction in the price of oil move the price level down?

[Topazan]

I guess technically it would, but you're charting aggregates, so the price level includes the price of everything.  I would think a change in a single price would be so insignificant as to not be observable on the chart at all.

Then again, you could make that same argument about the supply curve, so maybe I'm wrong...

One thing to keep in mind might be that oil is not a consumer good.

If the answers are as I suspect, there's a symmetry to the assignment.  One rightward and one leftward shift for demand, and one rightward and one leftward shift for supply.

[vokain]

I guess technically it would, but you're charting aggregates, so the price level includes the price of everything.  I would think a change in a single price would be so insignificant as to not be observable on the chart at all.

Then again, you could make that same argument about the supply curve, so maybe I'm wrong...

I think you're right in that case..what I had first (before the picture) was just moving the AD curve around, but I'm just not sure

then again, if oil prices go down, demand would go up. supply would follow in order to stay on the long-run ag supply line?

[Topazan]

At any rate, if you don't move the supply and demand curves, the equilibrium doesn't move, so it doesn't make sense to mark it.

then again, if oil prices go down, demand would go up. supply would follow in order to stay on the long-run ag supply line?

No, the demand curve wouldn't change in theory.  The supply curve would be higher, so the price might go up while the quantity Q remains the same or lower, but that's not the same thing as the demand curve moving.  Your assignment is about the short run, so don't worry about how the market will react.

[vokain]

okay so if reduction in price of oil occurs, short-run ag supply would go up since the cost of oil decreases, i thnk

[Topazan]

Down, if I'm not mistaken.  If I understand correctly, the supply curve represents the cost of production.

Again, take this with a grain of salt.

EDIT: Sorry, I misspoke in my last post.  I was describing an INCREASE in oil prices.

A decrease in price would cause "demand" to go up in the sense of movement along the demand curve, but it wouldn't move the curve itself.

[vokain]

Down, if I'm not mistaken.  If I understand correctly, the supply curve represents the cost of production.

Again, take this with a grain of salt.

EDIT: Sorry, I misspoke in my last post.  I was describing an INCREASE in oil prices.

A decrease in price would cause "demand" to go up in the sense of movement along the demand curve, but it wouldn't move the curve itself.

okay, i'm on the same page for the reduction in price of oil and increase in wage rate questions with ya now thanks. a couple bitcents on your way, i really do appreciate the help ("I would also expect the rise in wages to shift the supply curve left, reflecting the increased cost of doing business, while the reduction of oil prices would have the opposite effect.")

increase in money supply  would shift AD right...

so a reduction in consumer confidence of the future, this is tricky, it would move AD left? because they would save more considering consumers would spend less

[Topazan]

I think that's the expected answer.

Maybe you should hold off on sending until you find out if anything I've said is right. 

[vokain]

I think that's the expected answer.

Maybe you should hold off on sending until you find out if anything I've said is right. 

your time was worth it my friend

[Topazan]

If you insist.    Let me know the result, at least.

[vokain]

If you insist.    Let me know the result, at least.

correct correct correct coooooorrect  
left ya a trust feedback since i've always wanted to use it haha

[Topazan]

You mean you got graded already?  Like, your class is right now?  Talk about timing.

Thanks for the money and the feedback.  I guess I should return the favor.  How do you leave trust feedback?

[vokain]

You mean you got graded already?  Like, your class is right now?  Talk about timing.

Thanks for the money and the feedback.  I guess I should return the favor.  How do you leave trust feedback?

you're quick yourself!
it's a summer online class haha
just click my profile

[Topazan]

Oh I see, so the answer was given automatically after you submitted the assignment?

Well, see you around.  Good luck with the rest of the semester.

[vokain]

Oh I see, so the answer was given automatically after you submitted the assignment?

Well, see you around.  Good luck with the rest of the semester.

Danke, this homework just messed me up a bit because i was looking at it from the wrong perspective