Homework Answers
25) stock market crash. downward shift of consumption function means there is no change in marginal propensity to consume. When there is a stock market crash there is a reduction in wealth which means consumers now consume less at every price level.
26) third option is correct. when there is a new investment there is increased production and this increases the aggregate supply
28) unemployment rate is increased by 6%. Tax revenue is therefore reduced by 12*6 = 72 billion and spending is increased by 15 x 6 = 90 billion. Government budget deficit is therefore 200-72+90 = 218 billion deficit.
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Question 25 (2.5 points) Which of the following would cause a downward shift in the consumption...
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...
What would cause the BOTH the price level to decrease and real GDP to decrease? O...
What would cause the BOTH the price level to decrease and real GDP to decrease? O a shift to the left of the AD curve a shift to the right of the SRAS curve a shift to the left of the SRAS curve a shift to the right of the AD curve Question 6 (2 points) When there is an increase in aggregate demand along a stationary upward sloping short run in the short run. and aggregate supply curve, the...
Question 1 1 pts If an economist needs to use a model that collectively reflects the...
Question 1 1 pts If an economist needs to use a model that collectively reflects the interconnections and the entire market supply and demand relationships, which model is the best to use? The general equilibrium model. The cyclical unemployment model. The AD-AS model During the winter of 2014/2015 oil prices dropped by a large percentage compared to the summer of 2014 By March 2015, what changed? There was a shift to the left in the aggregate demand curve. There was...
1. Suppose that the intersection of the AD curve and the SRAS curve lies to the...
1. Suppose that the intersection of the AD curve and the SRAS curve lies to the right of the LRAS curve. The Keynesian prescription to resolve this problem would be ___________________ since the economy is _______________________. a.a decrease in government expenditures, in an inflationary gap b.an increase in taxes, in an inflationary gap c.a decrease in taxes, in a recessionary gap d.to do nothing, believed to be self-regulating e.a or b 2. Exhibit 11-1 Taxable Income Income Taxes $0 -...
2.5 points QUESTION 15 Which of the following would shift the supply of Florida Oranges to the left? On a hurricane...
2.5 points QUESTION 15 Which of the following would shift the supply of Florida Oranges to the left? On a hurricane in Florida destroying a major part of the crop b. an increase in the price of water per unit, a major input, used to irrigate the orange trees c. one of the orange grooves shuts down d all of the above QUESTION 16 All the factors below are causes of diminishing marginal returns, except a The "fixity of some...
Which of the following will most likely cause a decrease in short-run aggregate supply (leftward shift) in the goods and services market?
35. Which of the following will most likely cause a decrease in short-run aggregate supply (leftward shift) in the goods and services market? a. An increase in the productivity of labor b. A reduction in the price of crude oil, a major imported commodity c. An increase in resource prices d. Favorable weather conditions in agricultural areas. 36. The vertical long-run aggregate supply curve reflects the fact that in the long run, an increase in the price level. a. Will not alter the economy's maximum...
For each of the following scenarios, use supply and demand analysis to predict the resulting changes...
For each of the following scenarios, use supply and demand analysis to predict the resulting changes in the real interest rate, national saving, and investment. Show all your diagrams. (LO6) a. The legislature passes a 10 percent investment tax credit. Under this program, for every $100 that a firm spends on new capital equipment, it receives an extra $10 in tax refunds from the government b. A reduction in military spending moves the government's budget from deficit into surplus. c....
\ **each option is fall or rise // or increase or decrease *** causes the gov...
\
**each option is fall or rise // or increase or decrease
*** causes the gov to run a budget SURPLUS or Deficit
(options)
**** last they want the graph curve shifted to reflect Scenario
3
10. The market for loanable funds and government policy The following graph shows the market for loanable funds. For each of the given scenarios, adjust the appropriate curve on the graph to help you complete the questions that follow. Treat each scenario separately by...
A decrease in the price level causes households to purchase more goods and services. This is...
A decrease in the price level causes households to purchase more goods and services. This is illustrated on the AD/AS model as a shift of the aggregate demand curve to the right. Select one: True False A realistic unemployment rate in the U.S. that corresponds with a real GDP growth rate of 0.5 percent growth would be a rate that is above 5 percent. Select one: True False Suppose a stock market crash makes people feel less wealthy. The decrease...
QUESTION 36 Which of the following would cause the long-run aggregate supply curve to shift to...
QUESTION 36 Which of the following would cause the long-run aggregate supply curve to shift to the right? (Choose all that apply). an improvement in technology an increase in the supply of capital goods an increase in the size of the labor force a decrease in nominal wages
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...
What would cause the BOTH the price level to decrease and real GDP to decrease? O a shift to the left of the AD curve a shift to the right of the SRAS curve a shift to the left of the SRAS curve a shift to the right of the AD curve Question 6 (2 points) When there is an increase in aggregate demand along a stationary upward sloping short run in the short run. and aggregate supply curve, the...
Question 1 1 pts If an economist needs to use a model that collectively reflects the interconnections and the entire market supply and demand relationships, which model is the best to use? The general equilibrium model. The cyclical unemployment model. The AD-AS model During the winter of 2014/2015 oil prices dropped by a large percentage compared to the summer of 2014 By March 2015, what changed? There was a shift to the left in the aggregate demand curve. There was...
2.5 points QUESTION 15 Which of the following would shift the supply of Florida Oranges to the left? On a hurricane in Florida destroying a major part of the crop b. an increase in the price of water per unit, a major input, used to irrigate the orange trees c. one of the orange grooves shuts down d all of the above QUESTION 16 All the factors below are causes of diminishing marginal returns, except a The "fixity of some...
For each of the following scenarios, use supply and demand analysis to predict the resulting changes in the real interest rate, national saving, and investment. Show all your diagrams. (LO6) a. The legislature passes a 10 percent investment tax credit. Under this program, for every $100 that a firm spends on new capital equipment, it receives an extra $10 in tax refunds from the government b. A reduction in military spending moves the government's budget from deficit into surplus. c....
\
**each option is fall or rise // or increase or decrease
*** causes the gov to run a budget SURPLUS or Deficit
(options)
**** last they want the graph curve shifted to reflect Scenario
3
10. The market for loanable funds and government policy The following graph shows the market for loanable funds. For each of the given scenarios, adjust the appropriate curve on the graph to help you complete the questions that follow. Treat each scenario separately by...
QUESTION 36 Which of the following would cause the long-run aggregate supply curve to shift to the right? (Choose all that apply). an improvement in technology an increase in the supply of capital goods an increase in the size of the labor force a decrease in nominal wages
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