In a(n) ____________, the economy is in equilibrium but with less than full employment. Keynesian zone...
In a(n) ____________, the economy is in equilibrium but with less than full employment.
Keynesian zone
inflationary gap
recessionary gap
neoclassical zone
Homework Answers
In a recessionary gap , the economy is in the equiibrium but with less than full employment. the answer is "C".
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In a(n) ____________, the economy is in equilibrium but with
less than full employment.
Keynesian zone...
A recessionary gap exists when the macro economy is in equilibrium at less than the potential...
A recessionary gap exists when the macro economy is in equilibrium at less than the potential output of the the economy because aggregate demand is insufficient to fully employ all of society's resources. In other words, the equilibrium (AD = AS) occurs to the left of the vertical long-run supply curve. At this point, potential output is reached (full employment) and if any unemployment occurs, then it is due to structural or frictional, that is, the economy is at its...
When equilibrium GDP falls short of full-employment GDP: an inflationary GDP gap emerges. taxes...
When equilibrium GDP falls short of full-employment GDP: an inflationary GDP gap emerges. taxes will increase. taxes will decrease. a recessionary GDP gap emerges.
The graph shows an economy that is above full employment. To restore full employment, the government...
The graph shows an economy that is above full employment. To restore full employment, the government decreases government expenditure by $0.5 trillion. Draw a curve to show the effect of the decrease if this is the only change in spending plans. Label the curve AD0-ΔE The decrease in government expenditure sets off a multiplier process. Draw a curve that shows the multiplier effect that returns the economy to full employment. Label it AD Draw a point at the full-employment equilibrium...
Question 6 (2 points) If equilibrium output and income (Y) is 1,000 less than potential output...
Question 6 (2 points) If equilibrium output and income (Y) is 1,000 less than potential output at full employment (Y), and the marginal propensity to consume is 0.8, how much additional autonomous spending is needed to reach full employment (that is, what is the recessionary gap)? If the government decreased total taxes out of income (T), how much would the tax cut have to be to bring the economy to full employment? Question 72 points) Circle the correct set of...
4)If the economy is at full employment, a rise in net exports causes: A) An increase...
4)If the economy is at full employment, a rise in net exports causes: A) An increase in RGDP, no change in price in the AD/AS graph. B) Increase in prices in the AD/AS model with no change in the Keynesian model C) Increase in price, no change in RGDP in the Keynesian model D)Increase in RGDP and price level in both models. E) Increases RGDP and prices in Keynesian 5) What describes the difference between Keynesian and classical thinking? A)...
1) Describe the Keynesian prescription to cure a recessionary gap. 2) Describe the Keynesian prescription to...
1) Describe the Keynesian prescription to cure a recessionary gap. 2) Describe the Keynesian prescription to cure an inflationary gap. 3) What is the difference between discretionary & automatic fiscal policy? 4) Explain the difference between zero, incomplete, & complete crowding out. If crowding out is complete, does it call into question the effectiveness of a rise in government purchases in order to remove an economy from a recessionary gap?
The graph shows the economy in long-run equilibrium Then the world economy expands and the demand...
The graph shows the economy in long-run equilibrium Then the world economy expands and the demand for U.S.-produced goods increases Price level (GDP deflator, 2009-100) 14 Draw a curve that shows 1) the effect of increased demand for U.S.-produced goods. Label it 1 2) the effect of a rising money wage rate that returns the economy to full employment. Label it 2. Draw a point at the new long-run equilibrium 13 SAS 12 An economy is in a long-run equilibrium....
QUESTION 3: KEYNESIAN MODEL (7 POINTS) (You must show all steps of your calculations to get...
QUESTION 3: KEYNESIAN MODEL (7 POINTS)
(You must show all steps of your calculations to get credit
for each item of this question; otherwise, you will be deducted
marks)
ANSWER THE FOLLOWING QUESTIONS BASED ON THE KEYNESIAN
ECONOMY DESCRIBED IN THE TABLE BELOW. ALL FIGURES ARE IN $
BILLIONS.
(2 points) A. Fill in the blanks in this table, making
the usual assumptions presented in the Keynesian theory (Chapter
9). All figures are in $ billions.
(1 point) B. Calculate...
1. When actual output (where AD and SRAS intersect) is less than LRAS, this is a(n)...
1. When actual output (where AD and SRAS intersect) is less than LRAS, this is a(n) _____ gap. (inflationary or recessionary?) 2. A inflationary gap is when actual output (where AD and SRAS intersect) is _____ less than LRAS. (greater than, or less than?) 3. A fall in government purchases will cause _____ (aggregate demand/short run aggregate supply) to _____ (shift in/shift out).
8. Suppose an economy is in full employment when income is $8,000 million. Currently, their income...
8. Suppose an economy is in full employment when income is $8,000 million. Currently, their income is $8,434 million. The spending multiplier is 2.8 and the tax multiplier is 2.0. (3 pts.) a. Is the economy in a recessionary or inflationary period? b. Suppose the government wants to increase interest rates to give an incentive to businesses to change how much they invest. How much will investments need to change for the economy to reach full employment? c. Suppose the...
A recessionary gap exists when the macro economy is in equilibrium at less than the potential output of the the economy because aggregate demand is insufficient to fully employ all of society's resources. In other words, the equilibrium (AD = AS) occurs to the left of the vertical long-run supply curve. At this point, potential output is reached (full employment) and if any unemployment occurs, then it is due to structural or frictional, that is, the economy is at its...
The graph shows an economy that is above full employment. To restore full employment, the government decreases government expenditure by $0.5 trillion. Draw a curve to show the effect of the decrease if this is the only change in spending plans. Label the curve AD0-ΔE The decrease in government expenditure sets off a multiplier process. Draw a curve that shows the multiplier effect that returns the economy to full employment. Label it AD Draw a point at the full-employment equilibrium...
Question 6 (2 points) If equilibrium output and income (Y) is 1,000 less than potential output at full employment (Y), and the marginal propensity to consume is 0.8, how much additional autonomous spending is needed to reach full employment (that is, what is the recessionary gap)? If the government decreased total taxes out of income (T), how much would the tax cut have to be to bring the economy to full employment? Question 72 points) Circle the correct set of...
The graph shows the economy in long-run equilibrium Then the world economy expands and the demand for U.S.-produced goods increases Price level (GDP deflator, 2009-100) 14 Draw a curve that shows 1) the effect of increased demand for U.S.-produced goods. Label it 1 2) the effect of a rising money wage rate that returns the economy to full employment. Label it 2. Draw a point at the new long-run equilibrium 13 SAS 12 An economy is in a long-run equilibrium....
QUESTION 3: KEYNESIAN MODEL (7 POINTS)
(You must show all steps of your calculations to get credit
for each item of this question; otherwise, you will be deducted
marks)
ANSWER THE FOLLOWING QUESTIONS BASED ON THE KEYNESIAN
ECONOMY DESCRIBED IN THE TABLE BELOW. ALL FIGURES ARE IN $
BILLIONS.
(2 points) A. Fill in the blanks in this table, making
the usual assumptions presented in the Keynesian theory (Chapter
9). All figures are in $ billions.
(1 point) B. Calculate...
8. Suppose an economy is in full employment when income is $8,000 million. Currently, their income is $8,434 million. The spending multiplier is 2.8 and the tax multiplier is 2.0. (3 pts.) a. Is the economy in a recessionary or inflationary period? b. Suppose the government wants to increase interest rates to give an incentive to businesses to change how much they invest. How much will investments need to change for the economy to reach full employment? c. Suppose the...
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