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QUESTION5 Suppose that consumers only spend 1/3 of each extra dollar of income they get or...
1.How does Keynes differ in his view on Say’s Law from the classical economists? 2.What is...
1.How does Keynes differ in his view on Say’s Law from the classical economists? 2.What is the difference between an open economy and a closed economy? 3.True or False Consumption is the smallest part of TE. 4.Our economy is at a decrease of $400 billion dollars from our natural real GDP. What is the state of the economy? What does Keynesian economist believe should be done? The government increases its spending $70 billion dollars. At the same time, consumption decreases...
(1) Other things being equal, which of the following will increase aggregate expenditures? Group of answer...
(1) Other things being equal, which of the following will increase aggregate expenditures? Group of answer choices An increase in domestic prices relative to foreign prices A decrease in the interest rate A decrease in real wealth An increase in income taxes A decrease in government purchases of goods and services (2) If the current unemployment rate is 5 percent and the natural unemployment rate is 6 percent, then the economy is Group of answer choices producing a level of...
Suppose that the current equilibrium GDP for a country is $13.5 trillion and that potential GDP...
Suppose that the current equilibrium GDP for a country is $13.5 trillion and that potential GDP is $14.3 trillion. How much does a change in tax revenue restore the economy to potential GDP, assuming the value of the government purchase multiplier is equal to 2 and a tax multiplier equal to -1.6 tax revenue decreases by $800 billion tax revenue increase by $800 billion tax revenue decrease by $500 bilion tax revenue decrease by $400 billion Suppose that the government...
provide an explanation with a steps of the answer for each question please 1,600 Planned aggregate expenditure, AE...
provide an explanation with a steps of the answer for each
question please
1,600 Planned aggregate expenditure, AE (billions of dollars) OS 1,600 Aggregate output, Y billions of dollars) Figure 24.5 1) Refer to Figure 24.5. If the economy is in equilibrium and the government decreases spending by $200 billion, equilibrium aggregate output decreases to S billion. A) 1,400 B) 1,200 C) 1,000 D) 800 2) Refer to Figure 24.5. If the economy is in equilibrium and the government increases...
1. If the economy is at full employment, increases in government spending: A) have a multiplier...
1. If the economy is at full employment, increases in government spending: A) have a multiplier effect on equilibrium output. B) have no effect on the aggregate price level. C) are primarily absorbed by price increases. D) reduce aggregate output. 2. Which of the following measures is NOT an example of discretionary fiscal policy? A) The unemployment compensation program pays out more money as unemployment rates rise. B) Tax rates are increased in the hope of slowing down the rate...
EXERCISE 1:TRUE OR FALSE 1. If the dollar appreciates relative to foreign currencies, we would expect...
EXERCISE 1:TRUE OR FALSE 1. If the dollar appreciates relative to foreign currencies, we would expect a country's net exports to fall. If government decreases its purchases by $20 billion and the MPC is 0.8, equilibrium GDP will decrease by $100 billion. When a private closed economy is at equilibrium, then (GDP-C) is equal to planned investment. If planned investment is larger than saving, then real GDP will increase as the economy adjusts toward equilibrium. 5. Positive net exports increase...
Suppose the US economy is at Potential GDP. Then, consumers and firms become pessimistic about future...
Suppose the US economy is at Potential GDP. Then, consumers and firms become pessimistic about future economic conditions, and consumption and investment decrease. In response to the decline in consumption and investment, the FED increases the money supply. Congress responds as well approving an increase in government spending and tax cuts. Illustrate this sequence of events using an Aggregate Demand/Aggregate Supply graph. State what happens with Real GDP, Prices, and the Unemployment rate after monetary and fiscal policies are implemented.
Inflationary pressure in the AS-AD model can be shown as a leftward shift of the AD...
Inflationary pressure in the AS-AD model can be shown as a leftward shift of the AD curve when the economy is already producing at its potential GDP. supply shock that shifts the AS to the right. rightward shift of the AD curve when the economy is already producing at its potential GDP. Typically, if consumer and business confidence is high then ________ and if consumer and business confidence is low then ________. AD shifts to the left; AD shifts to...
1. TRUE/FALSE( 1 mark per question, 20 marks in total) [1 An economy's income is the...
1. TRUE/FALSE( 1 mark per question, 20 marks in total) [1 An economy's income is the same as its expenditure because every transaction has a buyer and a seller. 2) GDP is the market value of all final goods and services produced by a country's citizens in a given period of time. (3) If nominal GDP is $10,000 and real GDP is $8,000, then the GDP deflator is 125 14) Other things equal, in countries with higher levels of real...
Problem 4.1 Question Help The new bridge to the United States in Southern Ontario and similar...
Problem 4.1 Question Help The new bridge to the United States in Southern Ontario and similar construction projects elsewhere in the country would be expected to help the economy in the short run, because O A. the use of discretionary fiscal policy would create an one time increase in real GDP but result in a job-less recovery. O B. the use of discretionary fiscal policy would create an one time increase in real GDP and employment. O C. the use...
Suppose that the current equilibrium GDP for a country is $13.5 trillion and that potential GDP is $14.3 trillion. How much does a change in tax revenue restore the economy to potential GDP, assuming the value of the government purchase multiplier is equal to 2 and a tax multiplier equal to -1.6 tax revenue decreases by $800 billion tax revenue increase by $800 billion tax revenue decrease by $500 bilion tax revenue decrease by $400 billion Suppose that the government...
provide an explanation with a steps of the answer for each
question please
1,600 Planned aggregate expenditure, AE (billions of dollars) OS 1,600 Aggregate output, Y billions of dollars) Figure 24.5 1) Refer to Figure 24.5. If the economy is in equilibrium and the government decreases spending by $200 billion, equilibrium aggregate output decreases to S billion. A) 1,400 B) 1,200 C) 1,000 D) 800 2) Refer to Figure 24.5. If the economy is in equilibrium and the government increases...
1. If the economy is at full employment, increases in government spending: A) have a multiplier effect on equilibrium output. B) have no effect on the aggregate price level. C) are primarily absorbed by price increases. D) reduce aggregate output. 2. Which of the following measures is NOT an example of discretionary fiscal policy? A) The unemployment compensation program pays out more money as unemployment rates rise. B) Tax rates are increased in the hope of slowing down the rate...
EXERCISE 1:TRUE OR FALSE 1. If the dollar appreciates relative to foreign currencies, we would expect a country's net exports to fall. If government decreases its purchases by $20 billion and the MPC is 0.8, equilibrium GDP will decrease by $100 billion. When a private closed economy is at equilibrium, then (GDP-C) is equal to planned investment. If planned investment is larger than saving, then real GDP will increase as the economy adjusts toward equilibrium. 5. Positive net exports increase...
Suppose the US economy is at Potential GDP. Then, consumers and firms become pessimistic about future economic conditions, and consumption and investment decrease. In response to the decline in consumption and investment, the FED increases the money supply. Congress responds as well approving an increase in government spending and tax cuts. Illustrate this sequence of events using an Aggregate Demand/Aggregate Supply graph. State what happens with Real GDP, Prices, and the Unemployment rate after monetary and fiscal policies are implemented.
1. TRUE/FALSE( 1 mark per question, 20 marks in total) [1 An economy's income is the same as its expenditure because every transaction has a buyer and a seller. 2) GDP is the market value of all final goods and services produced by a country's citizens in a given period of time. (3) If nominal GDP is $10,000 and real GDP is $8,000, then the GDP deflator is 125 14) Other things equal, in countries with higher levels of real...
Problem 4.1 Question Help The new bridge to the United States in Southern Ontario and similar construction projects elsewhere in the country would be expected to help the economy in the short run, because O A. the use of discretionary fiscal policy would create an one time increase in real GDP but result in a job-less recovery. O B. the use of discretionary fiscal policy would create an one time increase in real GDP and employment. O C. the use...
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