Suppose that the economy experiences a drought let explain impacts of this event on the curve
When we have a drought, it can affect our communities and our environment in many different ways. Everything in the environment is connected, just like everything in our communities is connected. Each different way that drought affects us is what we call an impact of drought. Show
Drought affects our lives in many different ways because water is such an important part of so many of our activities. We need water to live, and animals and plants do too. We need water to grow the food we eat. We also use water for many different things in our lives, like washing dishes, cooking, bathing, and swimming or river rafting. Water is also used to help make the electricity we use to run the lights in our houses and the video games you may like to play. When we don’t have enough water for these activities because of a drought, many people and many different things will be affected in many different ways. Drought Dominoes?We often talk about drought's impacts as either “direct” or “indirect.” What does that mean? Well, to find out, let's think about dominoes. If you set up a long line of dominoes on the floor and knock the first domino in the line over, it will cause the second domino in the line to fall and hit the third, which will fall and hit the fourth, and so on. If those dominoes were drought impacts, the first domino you knock over might be farmers’ corn crops dying. The second domino might be that the farmers would not have money to buy a new tractor from the dealer in town. The dealer would then lose money, which would be the third domino. If enough farmers lose their corn crops, the dealership might not be able to employ as many people or may even have to close down—the fourth domino. The dealership closing would cause many more impacts in the community. The farmers’ crops dying would be the “direct” impact of drought. The dealer losing money and all of the other impacts would be the “indirect” impacts of drought. All of the impacts in the example above would be “negative” impacts. But the impacts of drought aren’t always all negative. How can this be? Well, let's think about the example of the farmers we talked about earlier. The farmers who have lost their corn crops might use the money they didn’t spend to buy a new tractor to hire a person to drill irrigation wells. The well-drilling business would make more money, so for them the drought might actually have a “positive” or good impact. However, the overall impact of drought in an area is almost always negative. Types of Drought ImpactsDrought affects all parts of our environment and our communities. The many different drought impacts are often grouped as “economic,” “environmental,” and “social” impacts. All of these impacts must be considered in planning for and responding to drought conditions. Let's take a closer look at all kinds of drought impacts. Economic ImpactsEconomic impacts are those impacts of drought that cost people (or businesses) money. Here are just a few different examples of economic impacts:
Environmental ImpactsDrought also affects the environment in many different ways. Plants and animals depend on water, just like people. When a drought occurs, their food supply can shrink and their habitat can be damaged. Sometimes the damage is only temporary and their habitat and food supply return to normal when the drought is over. But sometimes drought's impact on the environment can last a long time, maybe forever. Examples of environmental impacts include:
Social ImpactsSocial impacts of drought are ways that drought affects people’s health and safety. Social impacts include public safety, health, conflicts between people when there isn't enough water to go around, and changes in lifestyle. Examples of social impacts include:
What is the short run economic outcome resulting from the increase in production cost known as?The short-run economic outcome as a result of increased production costs is referred to as stagflation.
Which factor causes a leftward shift of the aggregate demand curve?The aggregate demand curve tends to shift to the left when total consumer spending declines. 2 Consumers might spend less because the cost of living is rising or because government taxes have increased. Consumers may decide to spend less and save more if they expect prices to rise in the future.
Which of the following will not cause the AD curve to shift to the right?A change in inflation changes the level of prices in the economy and thereby cause a movement along the AD curve rather than a shift. Therefore, the correct option is D, an increase in inflation.
What will happen to output and the price level when the economy moves to long run equilibrium?Output decreases and the price level increases. Output keeps falling and price level keeps rising until real GDP returns to full employment output. As long as output is higher than full employment output, an unemployment rate that is higher than the natural rate will put upward pressure on wages and prices.
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