Homework Answers
Shift the demand curve to the left
Due to Contractionary fiscal policy, there will be decrease in aggregate expenditure which will shift the demand curve to the left leading to a decrease in equilibrium price And quantity
Thus Aggregate demand curve will shift to the left
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The graph below shows an economy in macroeconomic equilibrium. Suppose there is a reduction in the...
The graph below shows an economy in macroeconomic equilibrium. Suppose the federal government increases block grants...
The graph below shows an economy in macroeconomic equilibrium. Suppose the federal government increases block grants to state and local governments. All else equal, illustrate the effect of this expansionary fiscal policy on macroeconomic equilibrium. Provide your answer below: Price Level Aggregate Supply Aggregate Demand Whenever equilibrium real GDP is below the full-employment level of GDP, we have Select the correct answer below: O a natural level of employment O cyclical unemployment O only frictional and structural unemployment higher than...
QUESTION 19.1 POINT The graph below shows an economy in macroeconomic equilibrium. Suppose corporate tax rates...
QUESTION 19.1 POINT The graph below shows an economy in macroeconomic equilibrium. Suppose corporate tax rates are reduced. All else equal, illustrate the effect of this expansionary fiscal policy on macroeconomic equilibrium. Provide your answer below: Price Level Aggregate Supply Aggregate Demand DIGOP
The economy is in long-run macroeconomic equilibrium when the point of short-run macroeconomic equilibrium is on...
The economy is in long-run macroeconomic equilibrium when the point of short-run macroeconomic equilibrium is on the long-run aggregate supply curve. Using a graph, depict and explain the short-run versus long-run effects of: I. A contractionary monetary policy resulting in demand shock on the long-run macroeconomic equilibrium. Use one contractionary monetary policy to illustrate your analysis, explain the nature of the policy and clearly depict the direction of the shift and changes in the equilibrium point, where necessary. II. An...
1. 2. If the Fed wants to reduce the money supply through open market operations, it...
1.
2.
If the Fed wants to reduce the money supply through open
market operations, it will
Select the correct answer below :
sell bonds
buy bonds
Oreduce the required reserves ratio
reduce the discount rate
3.
A growing debt/GDP ratio could mean that, all else the
same,
Select the correct answer below:
the government is running large budget deficits
the government is paying down the debt
government expenditures are less than tax revenues.
the economy is in a growth...
The graph depicts a dynamic aggregate demand (AD) and aggregate supply (AS) model of the economy....
The graph depicts a dynamic aggregate demand (AD) and aggregate supply (AS) model of the economy. Suppose that in 2003, the economy is in macroeconomic equilibrium, with GDP at GDP (year 1). The Fed projects that in 2004, the aggregate demand curve will be AD (year 2), that potential real GDP will be $12.45 trillion (GDP (year 2), and that actual real GDP will be $12.39 trillion LRAS (year 1) LRAS (year 2) SRAS (ycar1) SRAS (year 2 ear Year...
The graph shows the economy in long-run equilibrium Then the world economy expands and the demand...
The graph shows the economy in long-run equilibrium Then the world economy expands and the demand for U.S.-produced goods increases Price level (GDP deflator, 2009-100) 14 Draw a curve that shows 1) the effect of increased demand for U.S.-produced goods. Label it 1 2) the effect of a rising money wage rate that returns the economy to full employment. Label it 2. Draw a point at the new long-run equilibrium 13 SAS 12 An economy is in a long-run equilibrium....
2. The diagram below shows the current macroeconomic situation for the economy of Ukraine (LRAS stands...
2. The diagram below shows the current macroeconomic situation for the economy of Ukraine (LRAS stands for Long-Run Aggregate Supply, SRAS stands for Short Run Aggregate Supply and AD for Aggregate Demand. You have been hired as an economic consultant to help the economy move to potential output, Y 0 LRAS SRAS AD Output, y a. Is Ukraine facing a recessionary or inflationary gap? Briefly explain b. Which type of fiscal policy expansionary or contractionary would move the economy of...
Describe three types of short-run macroeconomic equilibrium.
Describe three types of short-run macroeconomic equilibrium. A macroeconomic equilibrium in which real GDP is less than potential GDP is _______ equilibrium. And one in which real GDP equals potential GDP is _______ equlibrium. A. a below full-employment, a full-employment B. a full-employment, a below full-employment C. a full-employment, an inflationary D. a below full-employment, a recessionary The graph shows an economy's long-run aggregate supply curve. The economy is at an above full-employment equilibrium. Draw an aggregate demand curve and a short-run aggregate supply curve. Label them. In the graph,...
The graph shows an economy below full employment. To restore full employment, the government incr...
The graph shows an economy below full employment. To restore full employment, the government increases government expenditure by $0.5 trillion. Draw a curve to show the effect of the increase if it is the only change in spending plans. Label the curve ADo AE Price level (GDP price index, 2009-100) Potential GDP The increase in government expenditure sets off a multiplier process. Draw a curve that shows the multiplier effect that returns the economy to full employment. Label it AD,...
FISCAL POLICY IN-CLASS WORKSHEET 2 This question explores the role of expansionary and contractionary fiscal policy...
FISCAL POLICY IN-CLASS WORKSHEET 2 This question explores the role of expansionary and contractionary fiscal policy in the Aggregate Demand and Aggregate Supply model. You will use schedules for an aggregate demand line and an aggregate supply line to identify the equilibrium price level and real GDP in a macroeconomy. Additionally, you will compare the short-run equilibrium level of real GDP to the full employment level of real GDP to identify desirable fiscal policies. Below, you are provided the schedules...
The graph below shows an economy in macroeconomic equilibrium. Suppose the federal government increases block grants to state and local governments. All else equal, illustrate the effect of this expansionary fiscal policy on macroeconomic equilibrium. Provide your answer below: Price Level Aggregate Supply Aggregate Demand Whenever equilibrium real GDP is below the full-employment level of GDP, we have Select the correct answer below: O a natural level of employment O cyclical unemployment O only frictional and structural unemployment higher than...
QUESTION 19.1 POINT The graph below shows an economy in macroeconomic equilibrium. Suppose corporate tax rates are reduced. All else equal, illustrate the effect of this expansionary fiscal policy on macroeconomic equilibrium. Provide your answer below: Price Level Aggregate Supply Aggregate Demand DIGOP
1.
2.
If the Fed wants to reduce the money supply through open
market operations, it will
Select the correct answer below :
sell bonds
buy bonds
Oreduce the required reserves ratio
reduce the discount rate
3.
A growing debt/GDP ratio could mean that, all else the
same,
Select the correct answer below:
the government is running large budget deficits
the government is paying down the debt
government expenditures are less than tax revenues.
the economy is in a growth...
The graph depicts a dynamic aggregate demand (AD) and aggregate supply (AS) model of the economy. Suppose that in 2003, the economy is in macroeconomic equilibrium, with GDP at GDP (year 1). The Fed projects that in 2004, the aggregate demand curve will be AD (year 2), that potential real GDP will be $12.45 trillion (GDP (year 2), and that actual real GDP will be $12.39 trillion LRAS (year 1) LRAS (year 2) SRAS (ycar1) SRAS (year 2 ear Year...
The graph shows the economy in long-run equilibrium Then the world economy expands and the demand for U.S.-produced goods increases Price level (GDP deflator, 2009-100) 14 Draw a curve that shows 1) the effect of increased demand for U.S.-produced goods. Label it 1 2) the effect of a rising money wage rate that returns the economy to full employment. Label it 2. Draw a point at the new long-run equilibrium 13 SAS 12 An economy is in a long-run equilibrium....
2. The diagram below shows the current macroeconomic situation for the economy of Ukraine (LRAS stands for Long-Run Aggregate Supply, SRAS stands for Short Run Aggregate Supply and AD for Aggregate Demand. You have been hired as an economic consultant to help the economy move to potential output, Y 0 LRAS SRAS AD Output, y a. Is Ukraine facing a recessionary or inflationary gap? Briefly explain b. Which type of fiscal policy expansionary or contractionary would move the economy of...
The graph shows an economy below full employment. To restore full employment, the government increases government expenditure by $0.5 trillion. Draw a curve to show the effect of the increase if it is the only change in spending plans. Label the curve ADo AE Price level (GDP price index, 2009-100) Potential GDP The increase in government expenditure sets off a multiplier process. Draw a curve that shows the multiplier effect that returns the economy to full employment. Label it AD,...
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