Homework Answers
In the short run, a decline in the consumer confidence will result in a decline in consumption of goods and the demands for goods because the consumers would rather prefer to save instead of spend. This will shift both IS and AD curve leftward in the short run as the economy contracts. This shift is shown in the graph given below as (1).
However, in the long run, the fall in the prices of goods might lead to an increased demand for goods and hence an increase in the output due to the rightward shift in the AD curve as well as the IS curve. This shift is shown in the graph given below as (2).
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5. The recent financial crisis has led to a decline in the consumer confidence. Explain how...
1. Use the IS-LM model to show how an unexpected inflation could result in a higher...
1. Use the IS-LM model to show how an unexpected inflation could result in a higher short-run GDP. 2. Use the IS-LM model to show how an expected inflation could result in a higher short-run GDP. Explain using an IS-LM diagram. Make sure you explain in words what happens in your diagram. 3) Suppose a closed economy is initially in the long run equilibrium. Suppose the monetary base of this economy is $100 million, of which people carry $10 million...
1. Explain how consumer pessimism (or loss of consumer confidence) may affect AD and the macro...
1. Explain how consumer pessimism (or loss of consumer confidence) may affect AD and the macro equilibrium viz., the equilibrium value of each of the macro variables in the tables below, in both the long and short runs. 2. Apparently both investor pessimism and consumer pessimism would affect the macro- economy via a reduction in aggregate demand. Explain whether and why (a) there are any difference at all in their effects on prices and quantities in the various (incl. labor,...
Suppose the economy is initially in long-run equilibrium in the AD-AS model. Then stock prices decline...
Suppose the economy is initially in long-run equilibrium in the AD-AS model. Then stock prices decline sharply. Draw a diagram (show changes) of AD, LRAS, and SRAS for short run and long run with no government intervention.
What reference? Name: For each of the following events, use an AD-AS diagram to show 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)...
explain the causes of the recent Turkish financial and economic crisis that started in 2018. What...
explain the causes of the recent Turkish financial and economic crisis that started in 2018. What effect did it have on the Turkish economy and the global economy? What kind of fiscal and monetary policies were implemented by turkey? What are the challenges that remain for the Turkish economy? (1000 words)
9. Applying the extended AD-AS model Financial crises, such as the one that impacted many developed...
9. Applying the extended AD-AS model
Financial crises, such as the one that impacted many developed
countries starting in 2007, decrease banks’ ability and willingness
to make loans. Decreased availability of credit decreases
businesses’ ability to make investment purchases and consumers’
ability to buy goods and services. As a result, a financial crisis
is a negative shock for an economy.
The following graph shows an economy’s aggregate demand curve
and its short-run and long-run aggregate supply curves after a
financial...
HELP!! Need to know how to do the graphs for these. And can you please explain...
HELP!! Need to know how to do the graphs for these. And can you
please explain it to me so I can learn it?
Part 2: Short Answer Questions (30 points) Problem 3: Short run and long run economic analysis (20 points) Suppue thar he gonemanses hosabs incentive to consume. Consider the impact of this event on the short run economy and long run economy using the AD/AS model. Draw here the following the AD/AS diagram. Assume, for the sake...
1. Inflation and the Australian Economy The Australian Bureau of Statistics recently reported that there was no change in consumer prices between the start of January and end of March, equating t...
1. Inflation and the Australian Economy The Australian Bureau of Statistics recently reported that there was no change in consumer prices between the start of January and end of March, equating to a quarterly inflation rate of 0%. The Reserve Bank of Australia has highlighted their concerns that inflation has been consistently lower than their target range of inflation a) Why would the RBA consider inflation that is too low to be problematic for the Australian economy? b) What measure...
1. Inflation and the Australian Economy The Australian Bureau of Stat tistics recently reported that there was no change in consumer , equating to a quarterly inflation rate of 0%. The Reserve Ba...
1. Inflation and the Australian Economy The Australian Bureau of Stat tistics recently reported that there was no change in consumer , equating to a quarterly inflation rate of 0%. The Reserve Bank of Australia has highlighted their concerns that inflation has been prices between the start of Jan uary and end o rch consistently lower than their target range of inflation. a) Why would the RBA consider inflation that is too low to be problematic for the Australian economy?...
Question 1 (50 points) (Worth 50 points) Consider the recent episode of economic turmoil brought on...
Question 1 (50 points) (Worth 50 points) Consider the recent episode of economic turmoil brought on by Covid-19. Use a combination of these models to answer the following questions: IS/LM, AD/AS, Keynesian Cross, and the Money Market. a). Consider the month of April 2020 and effect of widespread social lock downs (assume for part a the government and the Fed do nothing). Using the models above, explain in as much detail as possible (specify models, which curves shift, how equilibrium...
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)...
9. Applying the extended AD-AS model
Financial crises, such as the one that impacted many developed
countries starting in 2007, decrease banks’ ability and willingness
to make loans. Decreased availability of credit decreases
businesses’ ability to make investment purchases and consumers’
ability to buy goods and services. As a result, a financial crisis
is a negative shock for an economy.
The following graph shows an economy’s aggregate demand curve
and its short-run and long-run aggregate supply curves after a
financial...
HELP!! Need to know how to do the graphs for these. And can you
please explain it to me so I can learn it?
Part 2: Short Answer Questions (30 points) Problem 3: Short run and long run economic analysis (20 points) Suppue thar he gonemanses hosabs incentive to consume. Consider the impact of this event on the short run economy and long run economy using the AD/AS model. Draw here the following the AD/AS diagram. Assume, for the sake...
1. Inflation and the Australian Economy The Australian Bureau of Statistics recently reported that there was no change in consumer prices between the start of January and end of March, equating to a quarterly inflation rate of 0%. The Reserve Bank of Australia has highlighted their concerns that inflation has been consistently lower than their target range of inflation a) Why would the RBA consider inflation that is too low to be problematic for the Australian economy? b) What measure...
1. Inflation and the Australian Economy The Australian Bureau of Stat tistics recently reported that there was no change in consumer , equating to a quarterly inflation rate of 0%. The Reserve Bank of Australia has highlighted their concerns that inflation has been prices between the start of Jan uary and end o rch consistently lower than their target range of inflation. a) Why would the RBA consider inflation that is too low to be problematic for the Australian economy?...
Question 1 (50 points) (Worth 50 points) Consider the recent episode of economic turmoil brought on by Covid-19. Use a combination of these models to answer the following questions: IS/LM, AD/AS, Keynesian Cross, and the Money Market. a). Consider the month of April 2020 and effect of widespread social lock downs (assume for part a the government and the Fed do nothing). Using the models above, explain in as much detail as possible (specify models, which curves shift, how equilibrium...
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