Homework Answers
1.
A
Increase in wage level, will increase the cost of production and SRAS curve will shift to the left. It will decrease SRAS,
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2.
D
Keynes will propose active fiscal policy that will intervene in the economy. It can be related to be government spending and tax decrease. In contrast to it, Classical economists and monetarists, will favor less government intervention and work on automatic stabilizers to help economy recover.
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Chinese Premier Wen Jiabao has wamed Japan that its companies operating in China should raise the...
How does cost push inflation begin? A cost-push inflation begins with as the result of an...
How does cost push inflation begin? A cost-push inflation begins with as the result of an increase in the money wage rate or an increase in the money prices of raw materials O A. an increase in aggregate demand OB. a decrease in short-run aggregate supply O C. an increase in short-run aggregate supply OD. a decrease in aggregate demand Explain for each event whether it changes the quantity of real GDP supplied, short-run aggregate supply, long run aggregate supply,...
Long run aggregate supply is the relationship between the quantity of real GDP supplied and the...
Long run aggregate supply is the relationship between the quantity of real GDP supplied and the price level when the maintain full employment changes in step with the price level to O A. money wage rate OB. quantity of money OC. real wage rate OD. interest rate supplied and the when the money wage rate, the prices of other resources and Short run aggregate supply is the relationship between the quantity of potential GDP remain constant O A real GDP...
2. Suppose the economy is in long-run equilibrium, with real GDP at $19 trillion and the unemployment rate at 5%. Now assume that the central bank unexpectedly decreases money supply by 6%. a) Illust...
2. Suppose the economy is in long-run equilibrium, with real GDP at $19 trillion and the unemployment rate at 5%. Now assume that the central bank unexpectedly decreases money supply by 6%. a) Illustrate the short-run effects of the monetary policy by using aggregate demand-aggregate supply model. Be sure to indicate the direction of change in real GDP, the price level and the unemployment rate. b) Illustrate the long-run effects of the monetary policy by using aggregate demand-aggregate supply model....
6. When the Federal Reserve Bank changes the money supply and interest erve Bank changes the money supply and inter...
6. When the Federal Reserve Bank changes the money supply and interest erve Bank changes the money supply and interest rates to affect the economy, this is called and it's a policy. a fiscal policy, Keynesian b. growth policy: Classical c. monetary policy: Classical d. monetary policy, Keynesian 7. An example of a long run Classical policy to increase potential GDP is a. the Federal Reserve implementing monetary policy to get the economy out of recession b. the government subsidizing...
Question 2 (3 points) Suppose the economy currently is in a recessionary gap. The Fed engages...
Question 2 (3 points) Suppose the economy currently is in a recessionary gap. The Fed engages in expansionary monetary policy. The impact of expansionary monetary policy will be to increase aggregate demand, increase prices, and increase real GDP - increase aggregate demand, increase prices, and decrease real GDP increase short-run aggregate supply, decrease in prices, and decrease in real GDP o increase short-run aggregate supply, decrease prices, and increase real GDP Page 2 of 30 Previous Page Next Page
Describe the channels by which monetary policy ripples through the economy and explain how each channel...
Describe the channels by which monetary policy ripples through the economy and explain how each channel operates. Suppose the Bank of Canada raises the overnight loans rate. When the Bank of Canada raises the overnight loans rate, it makes an open market Other short-term interest rates and the exchange rate rise. The quantity of money and the supply of loanable funds decrease The long-term real interest rate rises The higher real interest rate decreases consumption expenditure and investment. The exchange...
Economics: 1) Why is it possible to change real economic factors in the short run simply...
Economics: 1) Why is it possible to change real economic factors in the short run simply by printing and distributing more money? 2) Explain why a stable 5% inflation rate can be preferable to one that averages 4% but varies between 1-7% regularly. 3) Explain the difference between active and passive monetary policy. 4) Suppose the economy is in long-run equilibrium, with real GDP at $16 trillion and the unemployment rate at 5%, Now assume that the central bank unexpectedly...
The table gives the aggregate demand schedule, the short run aggregate supply schedule, and the long run aggregat...
The table gives the aggregate demand schedule, the short run aggregate supply schedule, and the long run aggregate supply schedule for an economy What is the quantity of real GDP at the short-run macroeconomic equilibrium? Price level (GDP deflator) The quantity of real GDP at the short-run macroeconomic equilibrium is s billion 100 Real GDP Real GDP Real GDP supplied supplied demanded in short run in long run (billions of 2007 dollars) 200 500 350 500 500 500 400 650...
Illustrate and briefly explain the beginning of a demand-pull inflation. 3. When answering parts a and b,...
Illustrate and briefly explain the beginning of a demand-pull inflation. 3. When answering parts a and b, draw the relevant Phillips curve. Using a short-run Phillips curve, what is the effect on the unemployment rate if the inflation rate unexpectedly rises. Using a long-run Phillips curve, what is the effect on the unemployment rate if the inflation rate rises and people expect the rise. Explain how your answer to part a about the unexpected rise in the inflation rate changes in...
1) of the Central Bank of Kuwait puts in place an expansionary monetary policy, its decision...
1) of the Central Bank of Kuwait puts in place an expansionary monetary policy, its decision is based on A) the fact that the economy is at ful employment B) Expectation of excessive inflation in the future C) the fact that the economy is in an expansion D) Unemployment level is high 2) When the interest rate is set at a very low rate A) the opportunity cost of holding money is very low B) the money demand will shift...
How does cost push inflation begin? A cost-push inflation begins with as the result of an increase in the money wage rate or an increase in the money prices of raw materials O A. an increase in aggregate demand OB. a decrease in short-run aggregate supply O C. an increase in short-run aggregate supply OD. a decrease in aggregate demand Explain for each event whether it changes the quantity of real GDP supplied, short-run aggregate supply, long run aggregate supply,...
Long run aggregate supply is the relationship between the quantity of real GDP supplied and the price level when the maintain full employment changes in step with the price level to O A. money wage rate OB. quantity of money OC. real wage rate OD. interest rate supplied and the when the money wage rate, the prices of other resources and Short run aggregate supply is the relationship between the quantity of potential GDP remain constant O A real GDP...
2. Suppose the economy is in long-run equilibrium, with real GDP at $19 trillion and the unemployment rate at 5%. Now assume that the central bank unexpectedly decreases money supply by 6%. a) Illustrate the short-run effects of the monetary policy by using aggregate demand-aggregate supply model. Be sure to indicate the direction of change in real GDP, the price level and the unemployment rate. b) Illustrate the long-run effects of the monetary policy by using aggregate demand-aggregate supply model....
6. When the Federal Reserve Bank changes the money supply and interest erve Bank changes the money supply and interest rates to affect the economy, this is called and it's a policy. a fiscal policy, Keynesian b. growth policy: Classical c. monetary policy: Classical d. monetary policy, Keynesian 7. An example of a long run Classical policy to increase potential GDP is a. the Federal Reserve implementing monetary policy to get the economy out of recession b. the government subsidizing...
Question 2 (3 points) Suppose the economy currently is in a recessionary gap. The Fed engages in expansionary monetary policy. The impact of expansionary monetary policy will be to increase aggregate demand, increase prices, and increase real GDP - increase aggregate demand, increase prices, and decrease real GDP increase short-run aggregate supply, decrease in prices, and decrease in real GDP o increase short-run aggregate supply, decrease prices, and increase real GDP Page 2 of 30 Previous Page Next Page
Describe the channels by which monetary policy ripples through the economy and explain how each channel operates. Suppose the Bank of Canada raises the overnight loans rate. When the Bank of Canada raises the overnight loans rate, it makes an open market Other short-term interest rates and the exchange rate rise. The quantity of money and the supply of loanable funds decrease The long-term real interest rate rises The higher real interest rate decreases consumption expenditure and investment. The exchange...
The table gives the aggregate demand schedule, the short run aggregate supply schedule, and the long run aggregate supply schedule for an economy What is the quantity of real GDP at the short-run macroeconomic equilibrium? Price level (GDP deflator) The quantity of real GDP at the short-run macroeconomic equilibrium is s billion 100 Real GDP Real GDP Real GDP supplied supplied demanded in short run in long run (billions of 2007 dollars) 200 500 350 500 500 500 400 650...
1) of the Central Bank of Kuwait puts in place an expansionary monetary policy, its decision is based on A) the fact that the economy is at ful employment B) Expectation of excessive inflation in the future C) the fact that the economy is in an expansion D) Unemployment level is high 2) When the interest rate is set at a very low rate A) the opportunity cost of holding money is very low B) the money demand will shift...
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