Assume unemployment is high and is a major problem in the United States. In an effort...
1. Assume unemployment is high and is a major problem in the United States. (a) In an effort to get unemployment back to its natural rate, the Federal Reserve enacts an expansionary monetary policy by purchasing $10 million in U.S. Treasury bonds. i. If the reserve ratio is 10 percent, what is the maximum increase in money supply that may occur as a result of the Fed's open market operation? Answer: ii. Give one reason why money supply may not...
Assume that the United States economy is currently in a recession in a short-run equilibrium. (a) Draw a correctly labeled graph of the short-run and long-run Phillips curves. Use the letter A lo label il point that could represent the current state of the economy in recession. (b) Draw a correctly labeled graph of aggregate demand and aggregate supply in the recession and show cach of the following. (i) The long-run equilibrium output, labeled Y (11) The current equilibrium output...
The United States is suffering from a high rate of unemployment. a) Identify two fiscal policy actions that Congress might initiate to solve the problem. b) Using a correctly labeled AD/AS graph, show and explain how the policies you identified in (a) will affect each of the following in the short-run aggregate demand output and employment price level c) Explain how the policies you identified in part (a) will impact real interest rates in the short-run. d) If the interest...
The Federal Reserve wishes to decrease unemployment in the United States. What would be an appropriate policy? sell government bonds on the open market increase reserve requirement buy government bonds on the open market increase the discount rate
i need the answers to 38 and 39 Canvas → XCO Question 38 1 pts Suppose, Congress enacts legislation to help book stores like Barnes and Noble to recover during the recession that began in late 2007. Which of the following policies is likely to have the greatest impact on the company and the economy? A corporate tax increase that allows Barnes and Noble to increase its workforce and contribute towards increasing aggregate supply. A reduction in the personal income...
Assume that the economy of Nicoland has a flourishing trade relationship with many nations, including the United States and an active public sector. Nicoland's economy is currently operating below the full employment level of output and trade has decreased between the two nations. Explain the impact of the problems in Nicoland's economy on the United States economy, using aggregate demand aggregate supply analysis. If Congress wants to repair the effects on the United States economy noted in (A) above, identify...
Please help with this economics FRQ!! Thanks! PRACTICE FRQ 2: The AS/AD Model Assume the economy of Hammonton is currently in a recession in a short run equilibrium 1. Draw a correctly labeled graph of short-run aggregate supply, long-run aggregate supply and aggregate demand. 2. Show each of the following: ar Snip 1. The long-run equilibrium output, labeled Yf The current equilibrium output and price levels, labeled Ye and PLe, respectively 2. 3. Assume there is an increase in exports...
The United States loses 2 million jobs over a two-year period. The federal government’s income tax revenues decline as a result, and the economy begins to go into a downturn. Which action describes a Keynesian response to this scenario? A Lower taxes on the middle class and expand government transportation projects. B Sell a large amount of bonds to increase government spending. C Raise taxes on corporate profits, and cut social welfare spending. D Reduce interest rates on government loans...
According to activists, which of the following would be an appropriate monetary policy action for a period of unemployment? Select one: a. a reduction in government spending b. the purchase of government securities by the Fed c. an increase in the reserve requirement d. a reduction in the tax rate on personal income e. an increase in the discount rate
4. The United States invaded Afghanistan on October 7th 2001 and Iraq on March 30th 2003. Taking these wars as a single event, show what effect the increase in governments spending for the war should have on the AS-AD model. What happens to prices, output and unemployment? a. This question obviously requires a graph and a written explanation. You need several clearly labeled graphs to answer this question. i. ii. You also need to explain what is happening in the...