At point X according to the graph the curve decreases which indicates that the economy is decreases.
So interest rate should be decreases because as interest rate decreases then the borrower can easily get loan and so money supply increases and if the money supply increases then aggregate demand increases and so production increases and so output increases and then economy again increases.
So option D is the correct statement.
Based on the graph below, what would be the appropriate fiscal policy action at point X?...
What fiscal policy action might increase investment and speed economic growth? Explain how the policy action would work. A fiscal policy action that might increase investment and speed economic growth is ______ , which works by ______ the real interest rate paid by borrowers and ______ the real interest rate earned by savers and suppliers of loanable funds. A. a decrease in the tax on interest income; lowering; raising B. government borrowing; raising; lowering C. a decrease in the tax...
Classify each statement as an example of expansionary fiscal policy, contractionary fiscal policy, or not an example of fiscal policy. Expansionary fiscal policy Contractionary fiscal policy Not an example of fiscal policy Answer Bank a decrease in government spending an increase in corporate bonds purchased a decrease in transfer payments a decrease in the money supply a decrease in taxes an increase in the money supply a decrease in the unemployment rate an increase in tax rates an increase in...
Expansionary fiscal policy ________________ to fight______________. increase the money supply and cut interest rates, recession. decrease the money supply and raise interest rates, inflation. increase government spending and cut taxes, recession. decrease government spending and raise taxes, inflation.
The graph below shows real GDP levels over time. Answer the following questions based on this graph. Business Cycle Real GDP Time a. At time T, what is the economy experiencing? An economic contraction Full-employment output An economic expansion b. In order to smooth out the business cycle, what type of fiscal policy should the government undertake? Expansionary fiscal policy Contractionary fiscal policy c. What type of actions might the government take? An Increase in taxes and a decrease in...
The graph below shows real GDP levels over time. Answer the following questions based on this graph. Business Cycle Real GDP Time a. At time T, what is the economy experiencing? Full-employment output An economic contraction An economic expansion b. In order to smooth out the business cycle, what type of fiscal policy should the government undertake? Contractionary fiscal policy Expansionary fiscal policy c. What type of actions might the government take? An increase in both taxes and government purchases...
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
Based on the equilibrium in the graph of the macroeconomy below, which of the following would be a correct monetary policy response? P LRAS SRAS AD Q increase government spending increase taxes decrease reserve requirements
The graph below shows real GDP levels over time. Answer the following questions based on this graph Business Cycle Real GDP a. At time T. what is the economy experiencing? Full employment output An economic expansion - An economic contraction a. At time t, what is the economy experiencing? O Full-employment output O An economic expansion O An economic contraction b. In order to smooth out the business cycle, what type of fiscal policy should the government undertake? O Contractionary...
1. When countries have severe debt problems: fiscal policy is an especially good idea. expansionary fiscal policy can reduce real growth. it makes no difference for fiscal policy. they can continue to borrow forever without any adverse consequences. 2. Increases in government spending financed through additional borrowing will typically: lead to higher taxes. lead to higher interest rates. stimulate both consumption and investment. provide more stimulus than when government spending is financed through higher taxes. 3. In a recession, automatic...
The government can reduce inflation with the help of both fiscal and monetary policy. An effective combination of these policies to reduce inflation would be to _______ and _______ Increase taxes; lower the reserve requirement ratio Increase taxes; sell government bonds Decrease taxes; buy government bonds Decrease government spending; lower discount rate