Fiscal stimulus is weaker in an open economy because the greater aggregate demand resulting from the...
- Fiscal stimulus is weaker in an open economy because the greater aggregate demand resulting from the stimulus raises interest rates, which then reduces aggregate demand some. A. True B. False
Homework Answers
True, the increase in the interest rate in the open market will appreciate the local currency and that will decrease the exports and aggregate demand.
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Fiscal stimulus is weaker in an open economy because the
greater aggregate demand resulting from the...
Consider the following statement: "Fiscal policy is a very precise tool for controlling aggregate demand. If...
Consider the following statement: "Fiscal policy is a very precise tool for controlling aggregate demand. If the government wants to increase aggregate demand by $5 billion, all it has to do is carry out carry out exactly $5 billion worth of government spending". Is this statement true or false? Explain in the answer considering both a closed economy and open economy. Also consider the difference between fixed and floating exchange rates in the open economy.
Suppose a fiscal stimulus of $200 billion is injected into the economy by lowering tax rates...
Suppose a fiscal stimulus of $200 billion is injected into the economy by lowering tax rates for the current fiscal year, but in the next year, taxes will go back to normal. This type of stimulus will tend to be more effective compared to a permanent tax cut. Is it true of false?
Question: Aggregate Demand stimulus, TARP (Troubled Asset Relief Program) and or also called the bailout package helped...
Question: Aggregate Demand stimulus, TARP (Troubled Asset Relief Program) and or also called the bailout package helped to prevent the 2007-2009 US economy's downturn from becoming another Great Depression. Why was the stimulus-fueled recovery substantially weaker than expected? Article: Aggregate Demand Stimulus Helped to Prevent the 2007–2009 Downturn from Becoming Another Great Depression. But Why Was the Stimulus-Fueled Recovery Substantially Weaker Than Expected? In retrospect, it is clear that the U.S. economy was in a precarious position in 2006. Trillions of...
In an economy where the money supply and aggregate demand have been decreased by the Central...
In an economy where the money supply and aggregate demand have been decreased by the Central Bank, you know that the Central Bank is using 答案选项组 a contractionary monetary policy. an expansionary monetary policy. a loose monetary policy. follow expansionary fiscal policy How does monetary policy affect the market? 答案选项组 Monetary policy has a more of an impact on consumption than investment. Monetary policy has a more of an impact on government spending than investment. Monetary policy has an indirect...
On a related note, it is also said that fiscal policy is weaker in an internationally open economy. Use an IS-LM graph connected to the NX=NFO graphs to help explain this. Specifically, show an increa...
On a related note, it is also said that fiscal policy is weaker in an internationally open economy. Use an IS-LM graph connected to the NX=NFO graphs to help explain this. Specifically, show an increase in government purchases in the IS-LM graph, and follow the predicted interest rate change through the NX=NFO model. What is Congress trying to do to GDP with this fiscal policy move? Does the resulting change in NX help move GDP in the desired direction, or...
1. What effects would each of the following have on aggregate demand or aggregate supply (other...
1. What effects would each of the following have on aggregate demand or aggregate supply (other things held constant)? Explain them to score high marks. a. The Canadian dollar loses its value and gets weaker by 3% against the US dollar. Ans: b. A $2 increase in the excise tax (production) on a pack of cigarettes. Ans: c. A reduction in interest rates at each price level. Ans: I d. COVID-19 reduces the demand for oil and thus oil prices...
Suppose a decrease in aggregate demand shifts the economy from equilibrium to P4 and Y1. LRAS...
Suppose a decrease in aggregate demand shifts the economy from equilibrium to P4 and Y1. LRAS Price Level AD Y Y* Real GDP a. Which of the following events would likely cause the decrease in aggregate demand? Personal consumption falls as workers become concerned about future employment prospects. Gross Investment Increases as capital units become fully utilized. Imports decrease due to Increased foreign prices b. A decrease in aggregate demand is of policy concern due to the increase in the...
With Aggregate Demand and Aggregate Supply, what are some of the economic disruptions resulting from COVID-19...
With Aggregate Demand and Aggregate Supply, what are some of the economic disruptions resulting from COVID-19 AKA the Coronavirus and how will it impact the aggregate demand and aggregate supply? What do you think will happen to consumer spending and how will the change in consumer spending effect aggregate demand?
Suppose a decrease in aggregate demand shifts the economy from equilibrium to P, and Y. Price Level ................
Suppose a decrease in aggregate demand shifts the economy from equilibrium to P, and Y. Price Level ............. Y, Y Real GDP a. Which of the following events would likely chuse the decrease in aggregate demand? Personal consumption falls as workers become concerned about future employment prospects Gross investment increases as capital units become fully utilized. Imports decrease due to increased foreign prices. a. Which of the following events would likely cause the decrease in aggregate demand? Personal consumption falls...
49. The change in aggregate demand that results from fiscal expansion changing the interest rate is...
49. The change in aggregate demand that results from fiscal expansion changing the interest rate is called the a. multiplier effect. b. crowding-out effect. c. accelerator effect. d. Ricardian equivalence effect. 50. If the stock market booms, then a. aggregate demand increases, which the Fed could offset by increasing the money b. aggregate supply increases, which the Fed could offset by increasing the money c. aggregate demand increases, which the Fed could offset by decreasing the money d. aggregate supply...
1. What effects would each of the following have on aggregate demand or aggregate supply (other things held constant)? Explain them to score high marks. a. The Canadian dollar loses its value and gets weaker by 3% against the US dollar. Ans: b. A $2 increase in the excise tax (production) on a pack of cigarettes. Ans: c. A reduction in interest rates at each price level. Ans: I d. COVID-19 reduces the demand for oil and thus oil prices...
Suppose a decrease in aggregate demand shifts the economy from equilibrium to P4 and Y1. LRAS Price Level AD Y Y* Real GDP a. Which of the following events would likely cause the decrease in aggregate demand? Personal consumption falls as workers become concerned about future employment prospects. Gross Investment Increases as capital units become fully utilized. Imports decrease due to Increased foreign prices b. A decrease in aggregate demand is of policy concern due to the increase in the...
Suppose a decrease in aggregate demand shifts the economy from equilibrium to P, and Y. Price Level ............. Y, Y Real GDP a. Which of the following events would likely chuse the decrease in aggregate demand? Personal consumption falls as workers become concerned about future employment prospects Gross investment increases as capital units become fully utilized. Imports decrease due to increased foreign prices. a. Which of the following events would likely cause the decrease in aggregate demand? Personal consumption falls...
49. The change in aggregate demand that results from fiscal expansion changing the interest rate is called the a. multiplier effect. b. crowding-out effect. c. accelerator effect. d. Ricardian equivalence effect. 50. If the stock market booms, then a. aggregate demand increases, which the Fed could offset by increasing the money b. aggregate supply increases, which the Fed could offset by increasing the money c. aggregate demand increases, which the Fed could offset by decreasing the money d. aggregate supply...
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