Now, suppose there is an increase in government spending. How would this change inflation and unemployment...
- Now, suppose there is an increase in government spending. How would this change inflation and unemployment rate? In other words, would inflation and unemployment rate increase or decrease as a result of an increase in government spending?
Homework Answers
When the Government spending increases jobs are created hence the unemployment will decrease and since people will have more money to spend the demand will rise and hence the inflation rate will increase.
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Now, suppose there is an increase in government spending. How
would this change inflation and unemployment...
Suppose you knew that the NAIRU (the non accelerating inflation rate of unemployment ) was 5.5...
Suppose you knew that the NAIRU (the non accelerating inflation rate of unemployment ) was 5.5 percent. The current unemployment rate is 5 percent. a) Is an increase in government spending more likely to increase output or increase prices? b) Now the unemployment rate rises to 6.5 percent , but the NAIRU stays the same. Is an increase in government more likely to increase output to to increase prices?
Attempts: 0 Keep the Highest: 0/1.6 10. Inflation and unemployment Suppose that the government believes the...
Attempts: 0 Keep the Highest: 0/1.6 10. Inflation and unemployment Suppose that the government believes the economy is not producing goods and services at its optimal level. In an attempt to stimulate the economy, the government increases the quantity of money in the economy by printing more money. This monetary policy change in prices induces firms to produce the economy's demand for goods and services, leading to product prices. In the short run, the ▼ goods and services. This, in...
Now consider an economy in which the government lowers its spending. In the long run, the...
Now consider an economy in which the government lowers its spending. In the long run, the result would be _____________ in the price level and _____________ in real output. Group of answer choices an increase; an increase a decrease; a decrease a decrease; no change no change; a decrease None of the listed options is correct.
During the Great Depression, real GDP decreased, unemployment rose, and the inflation rate was negative. Which...
During the Great Depression, real GDP decreased, unemployment rose, and the inflation rate was negative. Which would have been the appropriate federal government policy combination to improve economic performance? a.) increase government spending, decrease taxes, decrease the quantity of money b.) increase government spending, decrease taxes, increase the quantity of money c.) decrease government spending, increase taxes, decrease the quantity of money d.) keep government spending and taxes stable, increase the quantity of money
MPC Spending Multiplier Change in income 100 20 0.99 0.95 0.6 0.5 Change in government spending...
MPC Spending Multiplier Change in income 100 20 0.99 0.95 0.6 0.5 Change in government spending $15 $100 -$400 $450 $1,500 $2,000 -$1,000 $900 2.5 2.0 4. Assume that the equilibrium in the loanable funds market is at interest rate of 1.25% and quantity of funds at $20 billion. Suppose the current government deficit is zero so government is not borrowing any money. a) Suppose now government increases spending by $2 billion and finances it entirely by borrowing. This deficit...
IS-LM What combination of policies would best reduce inflation? a) Increase taxes, sell government bonds b)...
IS-LM What combination of policies would best reduce inflation? a) Increase taxes, sell government bonds b) Decrease taxes, buy government bonds c) Decrease taxes, lower the reserve ratio d) Decrease government spending, lower the discount rate e) Increase government spending, raise the discount rate Use the IS-LM model. Your policy instruments are: Taxes, Government Spending, and the Money Supply. Describe a policy or set of policies that achieve the following objectives. Your answer should include a diagram to show how...
Suppose unemployment was too high. What are two actions the government could do to lower unemployment?...
Suppose unemployment was too high. What are two actions the government could do to lower unemployment? Decrease the money supply Raise taxes; decreases spending Raise taxes; increase spending O Lower taxes; increase spending
(1) Calculate the government spending multiplier if, an increase in government spending by $5 million increases...
(1) Calculate the government spending multiplier if, an increase in government spending by $5 million increases real GDP by $20 million. Group of answer choices 0.20 0.25 2 5 4 (2) A major benefit of automatic stabilizers is that they: Group of answer choices guarantee a balanced budget over the course of the business cycle. have a tendency to reduce the national debt. moderate the effect of fluctuations in the business cycle. require legislative review by Congress before they can...
9 Suppose you knew that the NAIRU (the nonaccelerating inflation rate of rate is 3.5 percent....
9 Suppose you knew that the NAIRU (the nonaccelerating inflation rate of rate is 3.5 percent. nt) was 5 percent. The current unemployment a) An increase in government spending is more likely to increase output, not prices. prices, not output. prices and output neither prices, nor output. b) Now the unemployment rate rises to 6 percent, but the NAIRU stays the same. In this case, an increase in government spending is more likely to increase prices and output. Oneither prices,...
In the IS-LM model, an increase in government spending will result in An increase in income...
In the IS-LM model, an increase in government spending will result in An increase in income and a decrease in the interest rate An increase in inactive money balances and a decrease in saving An increase in active money balances and a decrease in net taxes An increase in consumption and a decrease in investment
Attempts: 0 Keep the Highest: 0/1.6 10. Inflation and unemployment Suppose that the government believes the economy is not producing goods and services at its optimal level. In an attempt to stimulate the economy, the government increases the quantity of money in the economy by printing more money. This monetary policy change in prices induces firms to produce the economy's demand for goods and services, leading to product prices. In the short run, the ▼ goods and services. This, in...
MPC Spending Multiplier Change in income 100 20 0.99 0.95 0.6 0.5 Change in government spending $15 $100 -$400 $450 $1,500 $2,000 -$1,000 $900 2.5 2.0 4. Assume that the equilibrium in the loanable funds market is at interest rate of 1.25% and quantity of funds at $20 billion. Suppose the current government deficit is zero so government is not borrowing any money. a) Suppose now government increases spending by $2 billion and finances it entirely by borrowing. This deficit...
IS-LM What combination of policies would best reduce inflation? a) Increase taxes, sell government bonds b) Decrease taxes, buy government bonds c) Decrease taxes, lower the reserve ratio d) Decrease government spending, lower the discount rate e) Increase government spending, raise the discount rate Use the IS-LM model. Your policy instruments are: Taxes, Government Spending, and the Money Supply. Describe a policy or set of policies that achieve the following objectives. Your answer should include a diagram to show how...
Suppose unemployment was too high. What are two actions the government could do to lower unemployment? Decrease the money supply Raise taxes; decreases spending Raise taxes; increase spending O Lower taxes; increase spending
9 Suppose you knew that the NAIRU (the nonaccelerating inflation rate of rate is 3.5 percent. nt) was 5 percent. The current unemployment a) An increase in government spending is more likely to increase output, not prices. prices, not output. prices and output neither prices, nor output. b) Now the unemployment rate rises to 6 percent, but the NAIRU stays the same. In this case, an increase in government spending is more likely to increase prices and output. Oneither prices,...
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