Explore BrainMass
Share

Explore BrainMass

    Economy Shrank last quarter

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    1. Suppose you have $500 in savings when the price level index is at 100.
    A) If inflation pushes the price level up by 10%, what will be the real value of your savings?
    B) What is the real value of your savings if the price level declines by 10%?

    2. Economy shrank last quarter
    See attached file.

    3. If the AS curve shift to the right, what happens to the equilibrium rate of output, and the equilibrium price level? (increase or decrease).

    © BrainMass Inc. brainmass.com April 1, 2020, 7:11 pm ad1c9bdddf
    https://brainmass.com/economics/aggregate-demand-and-supply/economy-shrank-last-quarter-398487

    Attachments

    Solution Preview

    1. Suppose you have $500 in savings when the price level index is at 100.

    A) If inflation pushes the price level up by 10%, what will be the real value of your savings?
    Every item now costs $1.10 instead of $1. ...

    Solution Summary

    Shifts in price levels and AS curves; lost output and income during recessions are discussed in the solution.

    $2.19