Homework Answers
a) If the current GDP is at a higher level than the LRAS, it will be considered as an inflationary gap or the expansionary gap in the market, the answer is "D".
b) "C"
Use of the government spending and the use of the taxes are considered as fiscal policy. The answer is "C".
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Question 19 (2.8 points) If GDP>LRAS, it is called which of the following? O natural rate...
QUESTION 10 0.36 points Save Answer LRAS Aggregate price level P, AD, Real GDP In response to the high unemployment rate and low level of real GDP at point El in the diagram above, the Federal Op...
QUESTION 10 0.36 points Save Answer LRAS Aggregate price level P, AD, Real GDP In response to the high unemployment rate and low level of real GDP at point El in the diagram above, the Federal Open Market Committee (the decision-making body of the Federal Reserve) decides to engineer a decrease in interest rates. If no other disturbances occurred, and the Fed calibrated its policy perfectly so that full employment equilibrium was restored, what price level would prevail at the...
A supply shock is A. an increase in the rate of inflation as a result of...
A supply shock is A. an increase in the rate of inflation as a result of expansionary fiscal policy, resulting in a leftward shift of the SRAS curve. B. a sudden increase in the price of an important natural resource, resulting in a leftward shift of the SRAS curve. O C. an increase potential GDP caused by a govemment expenditure multiplier, resulting in a leftward shift of the AD curve. D. an increase in both the inflation and the unemployment...
QUESTION 32 Use the following diagrams to answer question LRAS, SRAS, AD, AD 0 Y, Y...
QUESTION 32 Use the following diagrams to answer question LRAS, SRAS, AD, AD 0 Y, Y xit Panel (a) P LRAS, SRAS, SRAS AD Panel (c) Panel (d) In Panel (d), which of the following statements is not correct? A. At E1, the economy is at full employment. B. At E2, unemployment rate rises and jobs are scarce. C. At E1, the economy faces a stagdeflation crisis. D. At E2, the economy faces a stagflation crisis.
Use the following to answer questions 6-7: Figure: Determining Fiscal Policy LRAS SRAS AD Aggregate Price Level (P) Agg...
Use the following to answer questions 6-7: Figure: Determining Fiscal Policy LRAS SRAS AD Aggregate Price Level (P) Aggregate Output (Q) 6. (Figure: Determining Fiscal Policy) Expansionary fiscal policies could: A) move the economy to full employment. B) move the economy away from full employment. C) lead to a lower price level. D) lead to a lower price level and lower unemployment. 7. (Figure: Determining Fiscal Policy) The best discretionary fiscal policy option is: A) expansionary fiscal policy that leads...
FISCAL POLICY IN-CLASS WORKSHEET 2 This question explores the role of expansionary and contractionary fiscal policy...
FISCAL POLICY IN-CLASS WORKSHEET 2 This question explores the role of expansionary and contractionary fiscal policy in the Aggregate Demand and Aggregate Supply model. You will use schedules for an aggregate demand line and an aggregate supply line to identify the equilibrium price level and real GDP in a macroeconomy. Additionally, you will compare the short-run equilibrium level of real GDP to the full employment level of real GDP to identify desirable fiscal policies. Below, you are provided the schedules...
Which of the following statements is not correct? A. The Fed was created in 1913 to...
Which of the following statements is not correct? A. The Fed was created in 1913 to provide central banking functions. B. The Fed is a central bank of the U.S.; it plays a role in regulating banks; and it is responsible for conducting the nation's monetary policy C. The Fed makes loans to any qualified business that requests one. D. Federal Open Market Committee makes decisions regarding monetary policy. QUESTION 56 Which of the following statements is not true? A....
3. You are given the following information about the economy: autonomous consumption = $300 billion ...
3. You are given the following information about the economy: autonomous consumption = $300 billion planned investment = $300 billion government spending = $500 billion mpc = .8 imports = $200 billion exports = $500 billion a. Using the values above, what is the equation for the consumption function? b. Using the values above, what is the income/spending multiplier? c. What is the value of Net Exports? d. Is there a trade surplus or deficit? Of how much?...
QUESTION 38 2.5 38. Which of the following describes the way in which the self-correcting mechanism...
QUESTION 38 2.5 38. Which of the following describes the way in which the self-correcting mechanism of the economy resolves the problem of a recessionary gap? a) The recessionary gap is cured by an increase in government purchases of goods and services, which implies a shift to the right of the AD curve until full employment equilibrium is reestablished. b) The unemployment associated with a recessionary gap causes wages to fall, increasing Aggregate Supply and thus shifting the AS curve...
If the economy is currently experiencing SRAS and AD intersecting at a level of GDP that...
If the economy is currently experiencing SRAS and AD intersecting at a level of GDP that is below the full employment level, which of the following would move the economy back toward the natural rate of unemployment? (Hint: draw a graph with the SRAS, LRAS, and AD curves on it that fits this description in the question.) an increase in wealth an increase in the value of the dollar relative to other currencies an increase in interest rates a decrease...
Tuestion Completion Status: From the list on your right select the letter that contains the word,...
Tuestion Completion Status: From the list on your right select the letter that contains the word, please, name, etc that best matches the word, phrase, name, etc listed on the left. A Explains why SRAS is upward sloping B. Nominal GDP C. Unemployed D. AD declines, SRAS remains unchanged, both price and output decline E. Full employment if cyclical unemployment is equal to zero F. Is hurt by deflation G. Focuses on the short-run An economy with a combined structural...
QUESTION 10 0.36 points Save Answer LRAS Aggregate price level P, AD, Real GDP In response to the high unemployment rate and low level of real GDP at point El in the diagram above, the Federal Open Market Committee (the decision-making body of the Federal Reserve) decides to engineer a decrease in interest rates. If no other disturbances occurred, and the Fed calibrated its policy perfectly so that full employment equilibrium was restored, what price level would prevail at the...
A supply shock is A. an increase in the rate of inflation as a result of expansionary fiscal policy, resulting in a leftward shift of the SRAS curve. B. a sudden increase in the price of an important natural resource, resulting in a leftward shift of the SRAS curve. O C. an increase potential GDP caused by a govemment expenditure multiplier, resulting in a leftward shift of the AD curve. D. an increase in both the inflation and the unemployment...
QUESTION 32 Use the following diagrams to answer question LRAS, SRAS, AD, AD 0 Y, Y xit Panel (a) P LRAS, SRAS, SRAS AD Panel (c) Panel (d) In Panel (d), which of the following statements is not correct? A. At E1, the economy is at full employment. B. At E2, unemployment rate rises and jobs are scarce. C. At E1, the economy faces a stagdeflation crisis. D. At E2, the economy faces a stagflation crisis.
Use the following to answer questions 6-7: Figure: Determining Fiscal Policy LRAS SRAS AD Aggregate Price Level (P) Aggregate Output (Q) 6. (Figure: Determining Fiscal Policy) Expansionary fiscal policies could: A) move the economy to full employment. B) move the economy away from full employment. C) lead to a lower price level. D) lead to a lower price level and lower unemployment. 7. (Figure: Determining Fiscal Policy) The best discretionary fiscal policy option is: A) expansionary fiscal policy that leads...
Which of the following statements is not correct? A. The Fed was created in 1913 to provide central banking functions. B. The Fed is a central bank of the U.S.; it plays a role in regulating banks; and it is responsible for conducting the nation's monetary policy C. The Fed makes loans to any qualified business that requests one. D. Federal Open Market Committee makes decisions regarding monetary policy. QUESTION 56 Which of the following statements is not true? A....
QUESTION 38 2.5 38. Which of the following describes the way in which the self-correcting mechanism of the economy resolves the problem of a recessionary gap? a) The recessionary gap is cured by an increase in government purchases of goods and services, which implies a shift to the right of the AD curve until full employment equilibrium is reestablished. b) The unemployment associated with a recessionary gap causes wages to fall, increasing Aggregate Supply and thus shifting the AS curve...
If the economy is currently experiencing SRAS and AD intersecting at a level of GDP that is below the full employment level, which of the following would move the economy back toward the natural rate of unemployment? (Hint: draw a graph with the SRAS, LRAS, and AD curves on it that fits this description in the question.) an increase in wealth an increase in the value of the dollar relative to other currencies an increase in interest rates a decrease...
Tuestion Completion Status: From the list on your right select the letter that contains the word, please, name, etc that best matches the word, phrase, name, etc listed on the left. A Explains why SRAS is upward sloping B. Nominal GDP C. Unemployed D. AD declines, SRAS remains unchanged, both price and output decline E. Full employment if cyclical unemployment is equal to zero F. Is hurt by deflation G. Focuses on the short-run An economy with a combined structural...
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