if the economy has entered a recession, you are asked whether it was caused by a demand shock or supply shock. what one piece of data about the current economic conditions will be most helpful in making this decision. explain
if the economy has entered a recession, you are asked whether it was caused by a...
Suppose that the economy has entered into a recession, and you are asked to determine whether it has been caused by a demand shock or a supply shock. What one piece of data about the current economic conditions will be most helpful in making this distinction? Explain.
When aggregate supply shifts and causes the economy to enter a recession similar to the Great Recession, explain why monetary policy is much less likely to restore the economy to its prerecession conditions that if the recession is caused solely by a decrease in aggregate demand.
1. Consider an economy that is in the short-run equilibrium, above the level of the tructural output. i) What kind of shock could have caused this expansion in the production? Discuss the economic adjustments using the aggregate supply and demand model (OA-DA). (ii) In the absence of other exogenous shocks, explain how the economy would return to its level of structural equilibrium. 1. Consider an economy that is in the short-run equilibrium, above the level of the tructural output. i)...
The graph below depicts an economy where a decline in aggregate demand has caused a recession. Assume the government decides to conduct fiscal policy by changing taxes to reduce the burden of this recession.Instructions: Enter your answers as a whole number. If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers.a. How much does aggregate demand need to change to restore the economy to its long-run equilibrium? b. If the MPC...
2. What would happen to the following variables if the economy entered a recession phase? a. Income b. Investment c. Demand for durable goods d. Unemployment rate 3. Briefly, explain the three types on unemployment, give example of each one and show which type of unemployment is part of natural rate of unemployment and which one is not.
The graph below depicts an economy where a decline in aggregate demand has caused a recession. Assume the government decides to conduct fiscal policy by increasing government purchases to reduce the burden of this recession. Fiscal Policy LRAS Price Level 100 200 300 400 500 600 700 800 900 Real GDP (billions of dollars) Instructions: Enter your answers as a whole number. a. How much does aggregate demand need to increase to restore the economy to its long-run equilibrium? O...
The graph below depicts an economy where a decline in aggregate demand has caused a recession. Assume the government decides to conduct fiscal policy by increasing government purchases to reduce the burden of this recession. Fiscal Policy LRAS Price Level 80 160 240 320 400 480 560 640 720 800 Real GDP (billions of dollars) Instructions: Enter your answers as a whole number. a. How much does aggregate demand need to change to restore the economy to its long-run equilibrium?...
The graph below depicts an economy where a decline in aggregate demand has caused a recession. Assume the government decides to conduct fiscal policy by changing taxes to reduce the burden of this recession. Fiscal Policy 150 LRAS Price Level 0 80 160 240 320 400 480 560 640 720 800 Real GDP (billions of dollars) Instructions: Enter your answers as a whole number. If you are entering any negative numbers be sure to include a negative sign (-) in...
The graph below depicts an economy where a decline in aggregate demand has caused a recession. Assume the government decides to conduct fiscal policy by increasing government purchases to reduce the burden of this recession. Fiscal Policy 180 LRAS AS 160 140 120 100 Price Level 80 60 40 AD 20 AD 0 100 200 300 400 500 600 700 800 900 Real GDP (billions of dollars) Instructions: Enter your answers as a whole number. a. How much does aggregate...
The graph below depicts an economy where a dcline in aggregate demand has caused a recession. Assume the government decides to conduct fiscal policy by increasing government purchases to reduce the burden of this recession Fiscal Policy Price Level 80 160 240 320 400 480 560 640 720 800 Real GDP (billions of dollars) Instructions: Enter your answers as a whole number How much does aggregate demand need to change to restore the economy to il long-run equilibrium billion of...