Explain the change in aggregate demand when:
If we talk about monetary policy then THE FED decide it according to the need of the economy
It generally adopts for two type of policies that are Exapnsionary and Contractionary monetary policy
For example, if economy is under recession then it adopts for the Expansionary monetary policy by lowering the interest rates and increase the money supply and aggregate demand
1.
As explained in formula in A4 sheet it can be clearly seen that aggregate demand is dependent on marginal propensity to consume and change in government expenditure.
So when there is increase in the government expenditure by$100 billion dollars then this will lead to have more aggregate demand in the short run causing the shift of aggregate demand curve to the right
2.
In second case where taxes are increased $100 billion dollar then the same formula will be applied as in question number 1 but here the aggregate demand will fall and there is leftward shift of the aggregate demand curve
3
In the last case it goes if both event occurs simultaneously then there will be no effect on the aggregate demand as both cancel each other
Explain the change in aggregate demand when: (6 pts) Government expenditure on goods and services increases...
Explain the change in aggregate demand when: 1. (6 pts) Government expenditure on goods and services increases by $100 Billion 2. (7 pts) Taxes are increased by $100 Billion 3. (7 pts) Both 1 and 2 occur simultaneously
Explain the change in aggregate demand when: a. Government expenditure on goods and services increases by $100 Billion b.Taxes are increased by $100 Billion c. Both 1 and 2 occur simultaneously
Explain the change in aggregate demand when 1)Taxes are increased by $100 Billion 2. (7 pts) Both 1 and 2 occur simultaneously (please try to do it ASAP) that was what the instructor privided Problem 4 "Monetary Policy" (20 points) Explain the change in aggregate demand when: 1. (6 pts) Government expenditure on goods and services increases by $100 Billion 2. (7 pts) Taxes are increased by $100 Billion 3. (7 pts) Both 1 and 2 occur simultaneously
Suppose that the government increases its expenditure on goods and services by $100billion and pays for these goods and services by raising autonomous taxes by $100billion. What is the effect on aggregate demand and real GDP of each change individually and of the two combined?
The government expenditure multiplier is the effect of a change in government expenditure on goods and services on _____. a) Aggregate demand b) Real GDP c) Consumption d) Aggregate supply
In 4 to 6 sentences, explain why, when looking at subnational goods and services, government expenditure is not equal to the consumption result.
QUESTION 12 In the aggregate expenditure model if the government of Pasedonia decides to increase government spending by $ 100 billion and to finance this increase in government spending the government of Pasedonia increases taxes by $ 100 billion what effect will this have on the economy? (assume MPC=0.75) O A GDP stays the same OB GDP increases by $ 100 billion OC. GDP will increase by $ 400 billion D.GDP will decrease QUESTION 13 An example of an automatic...
provide an explanation with a steps of the answer for each question please 1,600 Planned aggregate expenditure, AE (billions of dollars) OS 1,600 Aggregate output, Y billions of dollars) Figure 24.5 1) Refer to Figure 24.5. If the economy is in equilibrium and the government decreases spending by $200 billion, equilibrium aggregate output decreases to S billion. A) 1,400 B) 1,200 C) 1,000 D) 800 2) Refer to Figure 24.5. If the economy is in equilibrium and the government increases...
Ignoring any supply−side effects, suppose the government is considering cutting taxes by $100 billion or increasing government expenditures on goods and services by $100 billion. Then A. the tax cut would increase aggregate demand and the increase in government expenditure would decrease aggregate demand. B. both policies would increase aggregate demand but the increase in government expenditure has a smaller effect. C. both policies would increase aggregate demand by the same amount. D. both policies would increase aggregate demand but...
the government cuts tases or inereases government spending 20) ) the aggregate demand curve shifts to the right. tne long-run aggregate supply curve shifts to the left. C) the 20) When aggregate demand curve shifts to the left. the short-run aggregate supply curve shifts to the left. t spending without an accompanying increase 21) An increase in govenment spending n taxes demand A) does not increase aggregate B) would effectively eliminate an inflationary gap. Q mquires additional govemment borrowing spending...