Homework Answers
1.A reduction in personal consumption expenditure shifts the aggregate demand curve to the left, reducing price level and GDP.
Answer-First option.
2.A decrease in aggregate demand reduces GDP and a reduction in GDP increases unemployment rate.
Answer-Second option.
3.If the real interest rate falls,then aggregate demand rises
Answer-First option
4.The policy action should be greater than the difference between Y* and Y1.This is because crowding out reduces the effect of expansionary fiscal policy.
Answer-Second option
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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 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...
a. Which of the following events would likely cause the decrease in aggregate demand? Personal consumption...
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.
Imports decrease due to increased foreign prices.
Gross investment increases as capital units become fully
utilized.
b. A decrease in aggregate demand is of policy concern due to
the increase in the:
unemployment rate.
productivity of workers.
price level.
c. Which policy action should the federal government enact?
Increase personal income tax rates
Decrease real...
What sequence of events results from a decrease in aggregate demand? O A. The price level...
What sequence of events results from a decrease in aggregate demand? O A. The price level rises, inventories decline, firms respond by increasing output and employment. O B. The price level falls, inventories increase, firms respond by reducing output and employment. O C. The price level rises, inventories increase, firms respond by increasing output and employment. O D. The price level falls, inventories decline, firms respond by increasing output and employment.
The graph below depicts an economy where an increase in aggregate demand has caused inflation. The...
The graph below depicts an economy where an increase in aggregate demand has caused inflation. The economy's current level of real GDP (Y) is above its long-run equilibrium. This is illustrated by the long-run aggregate supply curve (LRAS) and a price level 2) above the equilibrium value of Pe Fiscal Policy Price Level Real GDP Which of the following is an example of an automatic stabilizer that would help this economy move toward full employment again A reduced need for...
I. The economy of Zarland is operating below the full-employment level of output with a balanced budget. (a) Draw a correctly labeled graph of short-run aggregate supply, long-run aggregate supply, a...
I. The economy of Zarland is operating below the full-employment level of output with a balanced budget. (a) Draw a correctly labeled graph of short-run aggregate supply, long-run aggregate supply, and aggregate demand, and show each of the following. (Gi) The country's current equilibrium output and price level, labeled Yj and PL1. respectively (ii) The full-employment output, labeled Yf (b) Ir Zarland increases government expenditures and taxes by equal amounts, can aggregate demand increase? Explain. (c) If Zarland decides to...
Suppose that aggregate demand increases such that the amount of real output demanded rises by $7 billion at each price level
Refer to the table below Suppose that aggregate demand increases such that the amount of real output demanded rises by $7 billion at each price levela. By what percentage will the price level increase?Will this inflation be demand-pull inflation or will it be
cost-push inflation?b. If potential real GDP (that is, full-employment GDP) is $510
billion, what will be the size of the positive GDP gap after the
change in aggregate demand?c. If government wants to use fiscal policy to counter...
Read pp. 636-638 of you textbook (22.3. Shifts in the Aggregate Demand Curve) and answer the...
Read pp. 636-638 of you textbook (22.3. Shifts in the Aggregate Demand Curve) and answer the following question. Suppose the government raises consumption taxes. How would this policy affect aggregate demand? Would raising consumption taxes increase or decrease aggregate demand? Why? Please note that there is only one answer I am looking for for this assignment, and ensure you apply relevant economic concepts and theory to receive full credit. Please do not refer to or cite other sources except your...
Aggregate supply and demand problems For each scenario analyze the impacy of the “shocks” on the nation’s employment rate, real GDP, GDP gap anf price level. In addition illustrate the impact of...
Aggregate supply and demand problems
For
each scenario analyze the impacy of the “shocks” on the nation’s
employment rate, real GDP, GDP gap anf price level. In addition
illustrate the impact of each shock using an aggregate supply and
demand diagram. Finally, analyze the policy options available to
the government to offset the harmful impact of each of these
shocks.
UL uld wnen & bank becomes insolvent? Explain res B. Aggregate Supply and Demand Problem ur knowledge of aggregate supply...
14. Consider starting from full-employment equilibrium in our Aggregate Demand and Supply model (with flexible wages...
14. Consider starting from full-employment equilibrium in our Aggregate Demand and Supply model (with flexible wages and worker misperception of price level changes in the short run), at Po, Qn on the output market graph below. Then we get a decrease in Aggregate Demand from Agg D, to Agg D1. P LR Agg S SR Agg S. Agg D 0 Agg D1 Q Q1 N We can say that O In the long run, P and Q will return to...
Date Class: Name: Principles of Macro Multiple Choice en the choice shares completes the statement o...
Date Class: Name: Principles of Macro Multiple Choice en the choice shares completes the statement o n the the y would 1. Classical economie theory predicted that in the long experience! below full unemployment. b ring rate of inflation. e full employment. d. idle factors of production. 2. According to Keynes, what is the most important determinant of household spending on goods and services? The price level. b. The interest rate. c. Autonomous consumption. d. Disposable income. 3. Keynesians: a...
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...
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.
Imports decrease due to increased foreign prices.
Gross investment increases as capital units become fully
utilized.
b. A decrease in aggregate demand is of policy concern due to
the increase in the:
unemployment rate.
productivity of workers.
price level.
c. Which policy action should the federal government enact?
Increase personal income tax rates
Decrease real...
What sequence of events results from a decrease in aggregate demand? O A. The price level rises, inventories decline, firms respond by increasing output and employment. O B. The price level falls, inventories increase, firms respond by reducing output and employment. O C. The price level rises, inventories increase, firms respond by increasing output and employment. O D. The price level falls, inventories decline, firms respond by increasing output and employment.
The graph below depicts an economy where an increase in aggregate demand has caused inflation. The economy's current level of real GDP (Y) is above its long-run equilibrium. This is illustrated by the long-run aggregate supply curve (LRAS) and a price level 2) above the equilibrium value of Pe Fiscal Policy Price Level Real GDP Which of the following is an example of an automatic stabilizer that would help this economy move toward full employment again A reduced need for...
I. The economy of Zarland is operating below the full-employment level of output with a balanced budget. (a) Draw a correctly labeled graph of short-run aggregate supply, long-run aggregate supply, and aggregate demand, and show each of the following. (Gi) The country's current equilibrium output and price level, labeled Yj and PL1. respectively (ii) The full-employment output, labeled Yf (b) Ir Zarland increases government expenditures and taxes by equal amounts, can aggregate demand increase? Explain. (c) If Zarland decides to...
Aggregate supply and demand problems
For
each scenario analyze the impacy of the “shocks” on the nation’s
employment rate, real GDP, GDP gap anf price level. In addition
illustrate the impact of each shock using an aggregate supply and
demand diagram. Finally, analyze the policy options available to
the government to offset the harmful impact of each of these
shocks.
UL uld wnen & bank becomes insolvent? Explain res B. Aggregate Supply and Demand Problem ur knowledge of aggregate supply...
14. Consider starting from full-employment equilibrium in our Aggregate Demand and Supply model (with flexible wages and worker misperception of price level changes in the short run), at Po, Qn on the output market graph below. Then we get a decrease in Aggregate Demand from Agg D, to Agg D1. P LR Agg S SR Agg S. Agg D 0 Agg D1 Q Q1 N We can say that O In the long run, P and Q will return to...
Date Class: Name: Principles of Macro Multiple Choice en the choice shares completes the statement o n the the y would 1. Classical economie theory predicted that in the long experience! below full unemployment. b ring rate of inflation. e full employment. d. idle factors of production. 2. According to Keynes, what is the most important determinant of household spending on goods and services? The price level. b. The interest rate. c. Autonomous consumption. d. Disposable income. 3. Keynesians: a...
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