Homework Answers
1. The Keynesian transmission mechanism might get blocked when the investment is insensitive to the change in interest rate. And a liquidity trap in Keynesian economics "after the rate of interest has fallen to a certain level, liquidity preference may become virtually absolute that almost everyone prefers holding cash rather than holding a debt which yields so low rate of interest." Therefore, option C is correct.
2. As business taxes fall, then the businessman likely to invest more in their business. So the investment curve shifts, and it increases the long run aggregate supply and shift the short run aggregate supply curve to the right. Option D is correct.
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Question 24 2 pts Which of the following may block the Keynesian transmission mechanism? O interest-insensitive...
2. Describe the Keynesian transmission mechanism for a decrease in the money supply. Assuming that no...
2. Describe the Keynesian transmission mechanism for a decrease in the money supply. Assuming that no liquidity trap exists, that investment is interest-sensitive, and that the economy is in the horizontal portion of the AS curve, what happens to Real GDP and the price level? How can you tell if this is a direct transmission mechanism or an indirect one?
ugh there is no time limit except for the due date itself, you may only take this homework Question 1 2 pts...
ugh there is no time limit except for the due date itself, you may only take this homework Question 1 2 pts According to the class, why does the AD curve have a negative slope? When P rises, people substitute away from more expensive goods and services so AD decreases When P rises, the purchasing power of income falls so AD decreases When Prises, G decreases which means AD decreases When Prises, the suply of money shifts left sor falls...
Question 27 2 pts Which of the following causes the SRAS curve to shift right? An...
Question 27 2 pts Which of the following causes the SRAS curve to shift right? An increase in the price of a major input like steel An increase in government spending An increase in the country's physical capital An increase in exports Question 28 2 pts According to what was stated in class, which of the following would shift the LRAS curve right? An increase in the population's education level A decrease in labor hours An increase in the actual...
D Question 5 10 pts 29. Complete the following table showing which curve shifts, which way it shi...
D Question 5 10 pts 29. Complete the following table showing which curve shifts, which way it shifts, and the impact on the price level and real GDP as a result of the following occurrences: (1 oint each) Curve Curve CPI affected Assume occurrences are impacting the AD U.S. economy. or (Inflation) Increase IncreaseUnemployment Increase or rate or or Decrease Decrease SRAS Decrease Cost of non- labor inputs increase. Dollar appreciates in the foreign exchange market. HTML Edit
D Question...
te G Which of the follo... True O False Question 13 4 pts A change in...
te G Which of the follo... True O False Question 13 4 pts A change in the money supply or a change in velocity will change aggregate demand, which causes the aggregate demand curve to shift. O True O False Question 7 4 pts Suppose the economy is at below full employment. To improve this situation, Keynesian economists might propose that the government should expenditures, which will cause the aggregate demand curve to shift to the in an attempt to...
Question2 0.5 pts Which of the following is an assumption of New Keynesian theory? O prices...
Question2 0.5 pts Which of the following is an assumption of New Keynesian theory? O prices or wages are sticky (inflexible) money's velocity is stable and predictable technology (supply-side) shocks are the primary cause of business cycles business cycles are caused by a mismatch in timing between savings, investment, and consumption
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...
Question 43 5 pts If the Money Supply (M) is $10 billion, real GDP (Q) is...
Question 43 5 pts If the Money Supply (M) is $10 billion, real GDP (Q) is $20 billion, and the Price Level (P) is 2.0, then the velocity of money (V) is: 2. 40. 20. 4. --------------------------- Question 44 5 pts Which of the following does NOT explain the downward slope of the aggregate demand curve? The real balance (wealth) effect The multiplier effect The international trade effect The interest rate effect Question 45 5 pts An increase in household...
As prices rise, a fixed money supply will be able to buy fewer goods and services....
As prices rise, a fixed money supply will be able to buy fewer goods and services. This real balance effect is due to a(n) reduction in the interest rate. Increase in aggregate demand Decline in the purchasing power of the fixed quantity of money. Increase in income. The international substitution effect exists because a Higher price level will reduce interest rates and stimulate foreign investment. Lower price level will make domestically produced goods less expensive relative to foreign goods. Higher...
Question 2 0.2 pts An increase in government spending will cause which of the following when...
Question 2 0.2 pts An increase in government spending will cause which of the following when a liquidity trap situation exists? Output will increase. The interest rate will increase. Output will decrease. The interest rate will decrease. Output will not change.
ugh there is no time limit except for the due date itself, you may only take this homework Question 1 2 pts According to the class, why does the AD curve have a negative slope? When P rises, people substitute away from more expensive goods and services so AD decreases When P rises, the purchasing power of income falls so AD decreases When Prises, G decreases which means AD decreases When Prises, the suply of money shifts left sor falls...
Question 27 2 pts Which of the following causes the SRAS curve to shift right? An increase in the price of a major input like steel An increase in government spending An increase in the country's physical capital An increase in exports Question 28 2 pts According to what was stated in class, which of the following would shift the LRAS curve right? An increase in the population's education level A decrease in labor hours An increase in the actual...
D Question 5 10 pts 29. Complete the following table showing which curve shifts, which way it shifts, and the impact on the price level and real GDP as a result of the following occurrences: (1 oint each) Curve Curve CPI affected Assume occurrences are impacting the AD U.S. economy. or (Inflation) Increase IncreaseUnemployment Increase or rate or or Decrease Decrease SRAS Decrease Cost of non- labor inputs increase. Dollar appreciates in the foreign exchange market. HTML Edit
D Question...
te G Which of the follo... True O False Question 13 4 pts A change in the money supply or a change in velocity will change aggregate demand, which causes the aggregate demand curve to shift. O True O False Question 7 4 pts Suppose the economy is at below full employment. To improve this situation, Keynesian economists might propose that the government should expenditures, which will cause the aggregate demand curve to shift to the in an attempt to...
Question2 0.5 pts Which of the following is an assumption of New Keynesian theory? O prices or wages are sticky (inflexible) money's velocity is stable and predictable technology (supply-side) shocks are the primary cause of business cycles business cycles are caused by a mismatch in timing between savings, investment, and consumption
Question 2 0.2 pts An increase in government spending will cause which of the following when a liquidity trap situation exists? Output will increase. The interest rate will increase. Output will decrease. The interest rate will decrease. Output will not change.
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