Homework Answers
2. d
(As AD increases, P will increase and u will decrease.)
3. a
(Increase in AD will increase P and decrease u.)
4. a
(Nominal exchange rate will be pegged.)
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2. When aggregate demand increases, what happens to prices and employment? a. Prices will fall and...
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...
please help Question 4 Which statement best characterizes what happens to the aggregate demand curve when...
please help
Question 4 Which statement best characterizes what happens to the aggregate demand curve when the price level rises? a. A rise in the price level moves the economy leftward along the aggregate demand curve. b. A rise in the price level shifts the aggregate demand curve to the left. C. A rise in the price level moves the economy rightward along the aggregate demand curve. d. A rise in the price level shifts the aggregate demand curve to...
When the aggregate demand curve and the short-run aggregate supply curve intersect, a) the long-run aggregate...
When the aggregate demand curve and the short-run aggregate supply curve intersect, a) the long-run aggregate supply curve must also intersect at the same point. Ob) the economy must experience higher output than the natural level of output. o c) the economy must experience lower output than the natural level of output. o d) the economy is in short-run macroeconomic equilibrium. In a small economy in 2016, aggregate expenditure was $900 million while GDP that year was $750 million. Which...
Monetarists and classical economists: a. assume that the economy operates at full employment and stimulative monetary...
Monetarists and classical economists: a. assume that the economy operates at full employment and stimulative monetary policy will increase both aggregate supply and aggregate demand. b. assume the economy operates at full employment and stimulative monetary policy will only cause the price level to rise. c. assume that stimulative monetary policy will create high levels of GDP without inflation. d. assume that stimulative monetary policy will create high levels of GDP and slightly high prices.
5) If consumption increases by $200 and, in response, equilibrium aggregate expenditure increases by $600, the...
5) If consumption increases by $200 and, in response, equilibrium aggregate expenditure increases by $600, the multiplier is A) 5 B) 0.5.C)2. D) 0.3. 6) When the GDP in Kuwait rises relative to the GDP in other countries, will fall and will fall A) exports; imports B) exports; net exports C) imports; net exports D) net exports; imports 7) An increase in the price level will A) shift the aggregate demand curve to the left. B) shift the aggregate demand...
Given a downward-sloping aggregate demand (AD) curve and an upward-sloping short-run aggregate supply curve (SRAS), equilibrium...
Given a downward-sloping aggregate demand (AD) curve and an upward-sloping short-run aggregate supply curve (SRAS), equilibrium occurs where the two intersect. The value on the vertical axis is the equilibrium price level and the value on the horizontal axis is the equilibrium value of real GDP or output. What happens to the economy when AD shifts? It is useful to sketch a graph and show the shift. Suppose, for example, interest rates fall or wealth increases due to a stock...
Consider an economy with the following aggregate demand (AD) and aggregate supply (AS) schedules. These schedules...
Consider an economy with the following aggregate demand (AD) and aggregate supply (AS) schedules. These schedules reflect the fact that, prior to the period we’re examining, decision makers entered into contracts and made choices anticipating that the price level would be P105. AD105 Price Level SRAS105 (trillion dollars) (trillion dollars) 5.1 95 3.5 4.9 100 3.8 4.7 105 4.2 4.5 110 4.5 4.3 115 4.8 The quantity of GDP that will be produced will be _____ trillion and the price...
Exhibit 8-8 Aggregate expenditures function Real consumption and Investment expenditures (trillions of dollars per year) om...
Exhibit 8-8 Aggregate expenditures function Real consumption and Investment expenditures (trillions of dollars per year) om 0 1 2 3 4 5 6 7 8 9 10 Real disposable income (trillions of dollars per year) 23. In Exhibit 8-8, what is the households' marginal propensity to consume (MPC)? 20.5. c. 0.8. b. 0.75 d. 1. 24. Using the Keynesian aggregate expenditures model, which of the following is true? a Macro equilibrium may occur at levels of real GDP other than...
when all other influences on expenditure plans remain the same. Aggregate demand is the relationship between...
when all other influences on expenditure plans remain the same. Aggregate demand is the relationship between the quantity of demanded and the OA. real GDP, price level O B. nominal GDP, interest rate O C. real GDP; exchange rate O D. nominal GDP, quantity of output supplied What is stagflation and why does cost-push inflation cause stagflation? Stagflation is a combination of a in the price level and in real GDP O A. rise; a decrease O B. fall; a...
1). Draw a fully-labeled aggregate demand/aggregate supply diagram showing an economy that is weak – it...
1). Draw a fully-labeled aggregate demand/aggregate supply diagram showing an economy that is weak – it is producing below its full employment (“potential) GDP. a. What monetary policy would be appropriate for the economy? (contractionary or expansionary policy?) b. What would happen to interest rates in the economy if the Central Bank uses this policy? c. Show in your diagram how the policy impacts the economy, being sure to show what curve(s) moves, and what happens to prices and output...
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...
please help
Question 4 Which statement best characterizes what happens to the aggregate demand curve when the price level rises? a. A rise in the price level moves the economy leftward along the aggregate demand curve. b. A rise in the price level shifts the aggregate demand curve to the left. C. A rise in the price level moves the economy rightward along the aggregate demand curve. d. A rise in the price level shifts the aggregate demand curve to...
When the aggregate demand curve and the short-run aggregate supply curve intersect, a) the long-run aggregate supply curve must also intersect at the same point. Ob) the economy must experience higher output than the natural level of output. o c) the economy must experience lower output than the natural level of output. o d) the economy is in short-run macroeconomic equilibrium. In a small economy in 2016, aggregate expenditure was $900 million while GDP that year was $750 million. Which...
5) If consumption increases by $200 and, in response, equilibrium aggregate expenditure increases by $600, the multiplier is A) 5 B) 0.5.C)2. D) 0.3. 6) When the GDP in Kuwait rises relative to the GDP in other countries, will fall and will fall A) exports; imports B) exports; net exports C) imports; net exports D) net exports; imports 7) An increase in the price level will A) shift the aggregate demand curve to the left. B) shift the aggregate demand...
Exhibit 8-8 Aggregate expenditures function Real consumption and Investment expenditures (trillions of dollars per year) om 0 1 2 3 4 5 6 7 8 9 10 Real disposable income (trillions of dollars per year) 23. In Exhibit 8-8, what is the households' marginal propensity to consume (MPC)? 20.5. c. 0.8. b. 0.75 d. 1. 24. Using the Keynesian aggregate expenditures model, which of the following is true? a Macro equilibrium may occur at levels of real GDP other than...
when all other influences on expenditure plans remain the same. Aggregate demand is the relationship between the quantity of demanded and the OA. real GDP, price level O B. nominal GDP, interest rate O C. real GDP; exchange rate O D. nominal GDP, quantity of output supplied What is stagflation and why does cost-push inflation cause stagflation? Stagflation is a combination of a in the price level and in real GDP O A. rise; a decrease O B. fall; a...
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