30. If PAE = 1,000 + 0.8Y and potential output = 5,000 you can conclude the...
30. If PAE = 1,000 + 0.8Y and potential output = 5,000 you can conclude the economy has:
A. an expansionary gap.
B. a recessionary gap.
C. no output gap.
D. no autonomous expenditure.
Homework Answers
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30. If PAE = 1,000 + 0.8Y and potential output = 5,000 you can
conclude the...
Based on the diagram, if potential output equals 5,000 and the real interest rate is 3...
Based on the diagram, if potential output equals 5,000 and the real interest rate is 3 percent, then there is interest rate so that output will equal potential output. gap and the Fed mustthe real PAE Y PAE Expenditure Line ケ·1%) Expenditure Line Expenditure Line (r. 5%) 3,000 5000 7000 Output Y Mutiple Choice a recessionary, raise a recessionary, reduce no output; not change an expansionary, raise
An economy is described as follows: C = 400 + 0.6(Y – T) I p =...
An economy is described as follows: C = 400 + 0.6(Y – T) I p = 200 G = 200 NX = 60 T = 100 Y* = 2,100 a. For the economy described above, find autonomous expenditure, the multiplier, short-run equilibrium output, and the output gap. Instructions: Enter your responses as absolute values. Autonomous expenditure: Multiplier: Short-run equilibrium output: There is (Click to select) a recessionary an expansionary no output gap in the amount of . b. Illustrate this economy’s short-run equilibrium on a...
2. According to chapter 10 of the lectures, every society or economy has a potential output...
2. According to chapter 10 of the lectures, every society or economy has a potential output also called natural rate of output or full-employment rate of output or long-run aggregate supply. What factors determine the size of an economy’s potential output? 3. Societies don’t always produce their potential output level in the short run. Sometimes they might have an expansionary gap and sometimes a recessionary gap. a. What is an expansionary gap? b. What is a recessionary gap?
Refer to the figure below. Suppose the economy is in a short-run equilibrium at output Y3...
Refer to the figure below. Suppose the economy is in a short-run
equilibrium at output Y3 and inflation rate
π2. The economy is currently experiencing ______, and
the correct monetary policy response to this situation, to return
the economy to potential GDP, is to ______.
Select one:
a. a recessionary gap; raise taxes
b. an expansionary gap; cut taxes
c. a recessionary gap; increase the money supply
d. an expansionary gap; decrease the money supply
Inflation rate ASI AS2 AD...
Part I. Answer in the space below. 1. (12 marks) This is a question about the...
Part I. Answer in the space below. 1. (12 marks) This is a question about the Keynesian cross diagram. Suppose that planned aggregate expenditure (PAE) is given by the equation: PAE-2000+ 0.5 (Y). You also know that actual output is 4,000 and potential output is 3,600. a. Label the axes of figure below. b. Add the PAE and Y-PAE lines. Label the lines and the vertical intercept. c. Show actual output and potential output on the horizontal axis. Represent potential...
Part I. Answer in the space below. 1. (12 marks) This is a question about the...
Part I. Answer in the space below. 1. (12 marks) This is a question about the Keynesian cross diagram. Suppose that planned aggregate expenditure (PAE) is given by the equation: PAE 2000+ 0.5 (Y) You also know that actual output is 4,000 and potential output is 3,600. a. Label the axes of figure below. b. Add the PAE and Y-PAE lines. Label the lines and the vertical intercept. c. Show actual output and potential output on the horizontal axis. Represent...
a. Reynes digu . Question 6 (2 points) If equilibrium output and income (Y) is 1,000...
a. Reynes digu . Question 6 (2 points) If equilibrium output and income (Y) is 1,000 less than potential output at full employment (Y), and the marginal propensity to consume is 0.8, how much additional autonomous spending is needed to reach full employment that is, what is the recessionary gap)? If the government decreased total taxes out of income (T), how much would the tax cut have to be to bring the economy to full employment?
Question 6 (2 points) If equilibrium output and income (Y) is 1,000 less than potential output...
Question 6 (2 points) If equilibrium output and income (Y) is 1,000 less than potential output at full employment (Y), and the marginal propensity to consume is 0.8, how much additional autonomous spending is needed to reach full employment (that is, what is the recessionary gap)? If the government decreased total taxes out of income (T), how much would the tax cut have to be to bring the economy to full employment? Question 72 points) Circle the correct set of...
Por CPI LRAS, SRAS, AD AD, AD Y, Үр Ү, Yor Real GDP Suppose the economy...
Por CPI LRAS, SRAS, AD AD, AD Y, Үр Ү, Yor Real GDP Suppose the economy is producing the output level Yp, and a positive demand shock shifts the AD, curve to AD2. The economy now has __ A. a recessionary gap and expansionary fiscal policy can close the gap. B. an inflationary gap and expansionary fiscal policy can close the gap. C. a recessionary gap and contractionary fiscal policy can close the gap. D. an inflationary gap and contractionary...
17. Consider the Keynesian model discussed in class. If Y>PAE, then the economy: a. Is in...
17. Consider the Keynesian model discussed in class. If Y>PAE, then the economy: a. Is in equilibrium and experiencing a contractionary gap b. Is in equilibrium and inventories are lower than planned Is in disequilibrium and experiencing an expansionary gap c. d. Is in disequilibrium and inventories are higher than planned 18. Consider the Keynesian model discussed in class. If the re is a contractionary gap, then the economy: a. Is in equilibrium and inventories are higher than planned b....
Based on the diagram, if potential output equals 5,000 and the real interest rate is 3 percent, then there is interest rate so that output will equal potential output. gap and the Fed mustthe real PAE Y PAE Expenditure Line ケ·1%) Expenditure Line Expenditure Line (r. 5%) 3,000 5000 7000 Output Y Mutiple Choice a recessionary, raise a recessionary, reduce no output; not change an expansionary, raise
Refer to the figure below. Suppose the economy is in a short-run
equilibrium at output Y3 and inflation rate
π2. The economy is currently experiencing ______, and
the correct monetary policy response to this situation, to return
the economy to potential GDP, is to ______.
Select one:
a. a recessionary gap; raise taxes
b. an expansionary gap; cut taxes
c. a recessionary gap; increase the money supply
d. an expansionary gap; decrease the money supply
Inflation rate ASI AS2 AD...
Part I. Answer in the space below. 1. (12 marks) This is a question about the Keynesian cross diagram. Suppose that planned aggregate expenditure (PAE) is given by the equation: PAE-2000+ 0.5 (Y). You also know that actual output is 4,000 and potential output is 3,600. a. Label the axes of figure below. b. Add the PAE and Y-PAE lines. Label the lines and the vertical intercept. c. Show actual output and potential output on the horizontal axis. Represent potential...
Part I. Answer in the space below. 1. (12 marks) This is a question about the Keynesian cross diagram. Suppose that planned aggregate expenditure (PAE) is given by the equation: PAE 2000+ 0.5 (Y) You also know that actual output is 4,000 and potential output is 3,600. a. Label the axes of figure below. b. Add the PAE and Y-PAE lines. Label the lines and the vertical intercept. c. Show actual output and potential output on the horizontal axis. Represent...
a. Reynes digu . Question 6 (2 points) If equilibrium output and income (Y) is 1,000 less than potential output at full employment (Y), and the marginal propensity to consume is 0.8, how much additional autonomous spending is needed to reach full employment that is, what is the recessionary gap)? If the government decreased total taxes out of income (T), how much would the tax cut have to be to bring the economy to full employment?
Question 6 (2 points) If equilibrium output and income (Y) is 1,000 less than potential output at full employment (Y), and the marginal propensity to consume is 0.8, how much additional autonomous spending is needed to reach full employment (that is, what is the recessionary gap)? If the government decreased total taxes out of income (T), how much would the tax cut have to be to bring the economy to full employment? Question 72 points) Circle the correct set of...
Por CPI LRAS, SRAS, AD AD, AD Y, Үр Ү, Yor Real GDP Suppose the economy is producing the output level Yp, and a positive demand shock shifts the AD, curve to AD2. The economy now has __ A. a recessionary gap and expansionary fiscal policy can close the gap. B. an inflationary gap and expansionary fiscal policy can close the gap. C. a recessionary gap and contractionary fiscal policy can close the gap. D. an inflationary gap and contractionary...
17. Consider the Keynesian model discussed in class. If Y>PAE, then the economy: a. Is in equilibrium and experiencing a contractionary gap b. Is in equilibrium and inventories are lower than planned Is in disequilibrium and experiencing an expansionary gap c. d. Is in disequilibrium and inventories are higher than planned 18. Consider the Keynesian model discussed in class. If the re is a contractionary gap, then the economy: a. Is in equilibrium and inventories are higher than planned b....
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