Suppose the full-employment level of real output (Q) for a hypothetical economy is and the price level (P) initially is 100. Use the short-run aggregate supply schedules below to answer the questions that follow: AS (P-100) AS (P-125) AS(P-75)
P Q P Q P Q
125 280 125 250 125 310
100 250 100 220 100 280
75 220 75 190 75 250
a. What will be the level of real output in the short run if the price level unexpectedly rises from 100 to 125 because of an increase in aggregate demand? What if the price level unexpectedly falls from 100 to 75 because of a decrease in aggregate demand? Explain each situation, using numbers from the table.
b. What will be the level of real output in the long run when the price level rises from 100 to 125 ? When it falls from 100 to 75 ? Explain each situation.
c. Show the circumstances described in parts and on graph paper, and derive the long-run aggregate supply curve.

Daniel owns 100 shares of abc corporation's common stock. abc uses the fair value option, and recent declines in the firm's credit rating have caused the value of the firm's outstanding bonds payable to drop by 10%. daniel feels this is good news, but he wants to know what you think about the situation. which of the following represents your best response? a : "this situation may be positive for you in that the change in abc's credit standing indicates that the value of the firm's assets is likely increasing. however, the drop in bond value may negate any positive effects on your bottom line, because it means your claim on the firm's assets is simultaneously decreasing." b : "actually, this is bad news all around. the drop in the value of abc's bonds payable means shareholders' claims on the firm's assets have decreased. moreover, abc's declining credit rating means that the firm's assets are probably also dropping in value, thus magnifying your losses even more." c : "on the surface, this seems like good news because it means your claim on the firm's assets has increased. however, the drop in creditworthiness may also indicate that abc's assets are declining in value, thus offsetting any gains associated with the drop in bonds payable." d : "you're right! this is good news because it means that abc's debtholders have a decreased claim on the firm's assets. as a result, the firm's existing shareholders"like you"have seen their claim on the firm's assets increase."

Eileen's elegant earrings produces pairs of earrings for its mail order catalogue business. each pair is shipped in a separate box. she rents a small room for $150 a week in the downtown business district that serves as her factory. she can hire workers for $275 a week. there are no implicit costs. what is the marginal product of the second worker?

Sonic corp. manufactures ski and snowboarding equipment. it has estimated that this year there will be substantial growth in its sales during the winter months. it approaches the bank for credit. what is the purpose of such credit known as? a. expansion b. inventory building c. debt management d. emergency maintenance