Specify whether expansionary or contractionary fiscal policy would seem to be most appropriate in response to...
Specify whether expansionary or contractionary fiscal
policy would seem to be most appropriate in response to each of the
situations below.
For each of the situations below, sketch an AD-AS diagram using the
vertical potential GDP, aggregate demand, and aggregate supply
curves to illustrate your answer on (1) and shows what happen to
the price level, employment level, and output gap.
a. A recession. The economy is in the flat aggregate supply
zone.
b. A stock market collapse that hurts consumer and business
confidence.
c. Extremely rapid growth of exports. Currently, the economy is
producing at potential GDP.
d. Rising inflation. Currently, the economy is producing at the
intermediate zone of the aggregate supply curve.
e. A rise in oil prices. Make your own assumption of the original
equilibrium.
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Specify whether expansionary or contractionary fiscal
policy would seem to be most appropriate in response to...
Module 7 Ch.17 Fiscal Policy and AD-AS Graph (4 points on each scenario) This problem is...
Module 7 Ch.17 Fiscal Policy and AD-AS Graph (4 points on each scenario) This problem is adapted and modified from Openstax Ch.17 problem 53. Review ch.11 to 13 about AS-AD, Keynesian, and Neoclassical approaches. 1. Specify whether expansionary or contractionary fiscal policy would seem to be most appropriate in response to each of the situations below, and explain why. (2 points) 2. Sketch an AD-AS diagram for each of the situations. Your graph should include the vertical potential GDP, and...
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...
1) of the Central Bank of Kuwait puts in place an expansionary monetary policy, its decision...
1) of the Central Bank of Kuwait puts in place an expansionary monetary policy, its decision is based on A) the fact that the economy is at ful employment B) Expectation of excessive inflation in the future C) the fact that the economy is in an expansion D) Unemployment level is high 2) When the interest rate is set at a very low rate A) the opportunity cost of holding money is very low B) the money demand will shift...
Unit 3: Aggregate Demand, Aggregate Supply, and Fiscal Policy AD, AS, and LRAS Short Run vs....
Unit 3: Aggregate Demand, Aggregate Supply, and Fiscal Policy AD, AS, and LRAS Short Run vs. Long Run Aggregate Supply Draw the economy at full employment 1. In the short run, wages and resource prices will as price levels increase 2. In the long run, wages and resource prices will as price levels increase Shifters of AD and AS Shifters of Aggregate Demand Shifters of Aggregate Supply imi Recessionary Gap Draw an economy in a recession Inflationary Gap Draw an...
3/21/2019 Assignment Print view ECONOMICS Award: 10.00 polints Contractionary Fiscal Pollcy- Grap...
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6. (Problem 6) An economy is facing the inflationary gap shown in the accompanying diagram. Aggregate...
6. (Problem 6) An economy is facing the inflationary gap shown in the accompanying diagram. Aggregate price level LRAS SRAS Real GDP Potential —YpY output To eliminate the gap, should the central bank use expansionary or contractionary monetary policy? How will the interest rate, investment spending, consumer spending, real GDP, and the aggregate price level change as monetary policy closes the inflationary gap? The central bank can use contractionary monetary policy. The interest rate will rise, which would encourage a...
f contractionary monetary policy is used, then which of the following would be most likely to...
f contractionary monetary policy is used, then which of the following would be most likely to enhance the effect of the contractionary policy on aggregate demand? Interest rates would increase, leading to an exchange rate appreciation and a fall in net exports. Interest rates would decrease, leading to an exchange rate appreciation and a fall in net exports. Interest rates would decrease, leading to an exchange rate depreciation and a rise in net exports. Interest rates would increase, leading to...
V) How would the contractionary monetary policy affect the domestic economy’s trade balance compa...
v) How would the contractionary monetary policy affect the domestic economy’s trade balance compared to trade deficits (Expansionary Fiscal Policy) 2) Consider the following representation of a model economy, C = 4 + 0.7Y P = 5W I = 1 − 2i W/Pe = 0.02Y Q = 0 Ms = 600 X = 0 L(i, Y ) = P(5Y − 2i) i) Find the Aggregate Supply equation for this economy. ii) What is “medium run” full employment output in this...
Consider an economy with an inflationary gap. The advantage of using a contractionary fiscal policy rather...
Consider an economy with an inflationary gap. The advantage of using a contractionary fiscal policy rather than allowing the economy's natural adjustment mechanism to operate is that O A private sector expenditures increase on their own, the policy will stabilize real GDP. OB. It will shorten what might otherwise be a long recession OC. will reduce the inflationary pressure on prices that would otherwise ocur. OD. It wil dose the output gap. Click to select your answer MacBook Air Assume...
Econ HW, please help! UTION # FISCAL POLICY NAME the mix of government spending and taxing...
Econ HW, please help!
UTION # FISCAL POLICY NAME the mix of government spending and taxing in order to balance the Fiscal policy is best defined as: uncontrolled government spending, altering the mix of govern budget every fiscal year. changes in govern macroeconomic goals. vernment spending and taxing for the purpose of achieving certain minimizing government expenditures over the fiscal year. , while reases in government spending and lower taxes represent decreases in government spending and higher taxe contractionary fiscal...
Module 7 Ch.17 Fiscal Policy and AD-AS Graph (4 points on each scenario) This problem is adapted and modified from Openstax Ch.17 problem 53. Review ch.11 to 13 about AS-AD, Keynesian, and Neoclassical approaches. 1. Specify whether expansionary or contractionary fiscal policy would seem to be most appropriate in response to each of the situations below, and explain why. (2 points) 2. Sketch an AD-AS diagram for each of the situations. Your graph should include the vertical potential GDP, and...
1) of the Central Bank of Kuwait puts in place an expansionary monetary policy, its decision is based on A) the fact that the economy is at ful employment B) Expectation of excessive inflation in the future C) the fact that the economy is in an expansion D) Unemployment level is high 2) When the interest rate is set at a very low rate A) the opportunity cost of holding money is very low B) the money demand will shift...
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3/21/2019 Assignment Print view ECONOMICS Award: 10.00 polints Contractionary Fiscal Pollcy- Graphlcally Exercise 4 The graph below depicts an economy where a decline in aggregate demand has caused a recession. This economy's current level of real GDP (Y1) is below its long-run equilibrium, which is illustrated by the long-run aggregate supply curve(LRAS), and a price level (P1)below the equilibrium value of Pe a. Without any fiscal policy, we expect the economy to eventually return to full employment on its own....
6. (Problem 6) An economy is facing the inflationary gap shown in the accompanying diagram. Aggregate price level LRAS SRAS Real GDP Potential —YpY output To eliminate the gap, should the central bank use expansionary or contractionary monetary policy? How will the interest rate, investment spending, consumer spending, real GDP, and the aggregate price level change as monetary policy closes the inflationary gap? The central bank can use contractionary monetary policy. The interest rate will rise, which would encourage a...
f contractionary monetary policy is used, then which of the following would be most likely to enhance the effect of the contractionary policy on aggregate demand? Interest rates would increase, leading to an exchange rate appreciation and a fall in net exports. Interest rates would decrease, leading to an exchange rate appreciation and a fall in net exports. Interest rates would decrease, leading to an exchange rate depreciation and a rise in net exports. Interest rates would increase, leading to...
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Econ HW, please help!
UTION # FISCAL POLICY NAME the mix of government spending and taxing in order to balance the Fiscal policy is best defined as: uncontrolled government spending, altering the mix of govern budget every fiscal year. changes in govern macroeconomic goals. vernment spending and taxing for the purpose of achieving certain minimizing government expenditures over the fiscal year. , while reases in government spending and lower taxes represent decreases in government spending and higher taxe contractionary fiscal...
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