1. Explain whether each of the following events will increase, decrease, or have no effect on aggregate demand.
a) The stock market crashes.
b) People feel pessimistic with the outlook of economy, and start to save for a rainy day.
c) The city cuts the budget and hence the spending on schools.
d) Inflation increases workers expectation on the nominal wage.
A) When the stock market crashes, people's wealth is eroded and they spend less. So, aggregate demand decreases.
B) When people save more and spend less, the aggregate demand decreases.
C) When the government spends less, aggregate demand decreases.
D) People spend ore when they expect nominal wage to increase. So, the aggregate demand increases.
1. Explain whether each of the following events will increase, decrease, or have no effect on...
2. Explain whether each of the following events will increase, decrease, or have no effect on long-run aggregate supply. Draw the graph and show your work. (a) The United State experiences a wave of immigration. (b) Congress raises the minimum wage to $15 per hour. (c) Intel invents a new and more powerful computer chip (d) A severe hurricane damages factories along the East Coast 3. Draw a diagram with aggregate demand, short-run aggregate supply, and long-run aggregate supply. Be...
Determine whether each of the following events shifts the short-run aggregate-supply curve, the aggregate demand curve, or both. For each event that shift a curve, illustrate, and explain the effect using AD-AS. a. Due to Covid-19, many households feel pessimistic with the economy and decide to save more.b. Due to Covid-19 outbreak, many factories are forced to halt production for semiconductor. c. OPEC decide to raise the global price for oil.
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...
1. Determine the effect on aggregate demand of each of the following events. Explain whether it represents a movement along the aggregate demand (up or down) or a shift of the curve (leftward or rightward). Draw the graph and show your work. (e) a rise in the real value of assets in the economy due to a lower aggregate price level. (f) a rise in the real value of assets in the economy due to a surge in real estate...
Explain the effect of each of the following events on Mexico's aggregate demand. If the government of Mexico cuts income taxes, Mexico's aggregate demand O A. increases, and the aggregate demand curve shifts leftward O B. increases, and the aggregate demand curve shifts rightward O C. is unchanged, but the price level falls and quantity of real GDP demanded increases OD. decreases because it decreases the amount the government can spend O E. is unchanged because it just decreases the...
What reference? Name: For each of the following events, use an AD-AS diagram to show the short-run and long-run effects on output and the price level (inflation rate); identify any output gap. Assume the economy starts in long run equilibrium. (1) The government reduces income taxes AS P AD (2) A decrease in consumer confidence leads to lower consumption spending AS P. AD AD-AS practice assignment.pdf 2/2 (3) The Fed decreases the money supply AS Pe K AD y* (4)...
(1) Other things being equal, which of the following will increase aggregate expenditures? Group of answer choices An increase in domestic prices relative to foreign prices A decrease in the interest rate A decrease in real wealth An increase in income taxes A decrease in government purchases of goods and services (2) If the current unemployment rate is 5 percent and the natural unemployment rate is 6 percent, then the economy is Group of answer choices producing a level of...
2) During a Recession, the MPC tends to a) Increase, increases b) Decrease, decreases c) Decrease, increases d Increase, decreases which the recessionary gap 3) Suppose that the MPC is .75 and the U.S Federal Government reduces taxes by 10 million dollars. After 3 rounds of the multiplier process RGDP will change by a) 4.23 million b) 17.34 million c) 23.13 million dollars. d) 30 million 4) "George W. Bush's $152 billion tax rebate plan of 2008 was designed to...
17. Using separate diagrams for each of the following events, show the effect on the demand curve, the supply curve, the equilibrium price, and the equilibrium quantity of each of the events. a) A FDA report reveals that consumption of mint leads to a decrease in body fat. What happens to the mint market? b) A survey indicates that chocolate is American’s favourite ice cream flavour. What is the effect on the chocolate ice cream market if a new innovation...
16. to the wealth effect, an increase in the price level causes ease in real wealth and more purchases b. An incr C. A decrease d. rease in real wealth and fewer purchases se in real wealth and fewer purchases A decrease in r price level increase tends to reduce net exports, thereby reducing the amount of real goods a. The b. The international banner effect C. rvices purchased in the U.S. Economists refer to this phenomenon as international wealth...