This question considers the impact of a tax decrease in the AD-AS framework. The figure depicts an economy in which output equals potential. Suppose that the government gives households a tax rebate. 1.) Using the line drawing tool, draw the short-run effect of the government giving households a tax rebate. Properly label this line. 2.) Using the point drawing tool, plot the new short-run equilibrium. Label this point 'e₁'. Carefully follow the instructions above and only draw the required objects. Price Level LRASO eo Real GDP, Y ($, Trillions) SRASO ADO Select Line Point
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- The figure to the right shows an economy in an initial long-run equilibrium at point A a. Using the line drawing tool, show how, if at all, the equilibrium real GDP and the long-run equilibrium price level are affected by an income tax rebate (the return of previously paid taxes) from the government to households, which they can apply only to purchases of goods and services. Properly label this line. Carefully follow the instructions above, and only draw the required objects b. According to your graph, the equilibrium price level here to search O while the equilibrium real GDP ▼According to the "4-Quadrant Model" (4QM), which of the following statement is correct? O If there is a positive demand shock in the space market, the housing rent is going to increase in the short run, and will be lower than the current rent in the long run. If there is a positive demand shock in the space market, the housing price is going to decrease in the short run, and increase in the long run. If there is a positive demand shock in the asset market, the housing rent is going to decrease in the long run. O If there is a positive demand shock in the asset market, the housing price is going to decrease in the short run, and will be lower than the current price in the long run.PAE = 600 + 0.5Y PAE = 400 + 0.5Y PAE = 200 + 0.5Y 600 400 200 45° 400 800 1,200 Output, Y a.) Based on the figure, when PAE = 600 + 0.5Y, short-run equilibrium output equals: [ Select ] b.) If autonomous spending falls from 400 to 200, then the new short-run equilibrium output will equal: [ Select ] c.) If the government wishes to stimulate the economy and restore the old equilibrium, it could increase government spending by [Select ] to eliminate the output gap. d.) The government could also eliminate the recession through changing taxes. It would need to [ Select ] in order to offset the output gap. Planned Aggregate Expenditure, PAE
- For the following economy, find autonomous expenditure, the multiplier, short-run equilibrium output, and the output gap. By how much would autonomous expenditure have to change to eliminate the output gap? C = 550 + 0.75 (Y – T ) I p = 200 G = 200 NX = 60 T = 180 Y* = 3,400 Instructions: Enter your responses as absolute numbers. Autonomous expenditure: 875Multiplier: 4Short-run equilibrium output: 3500 There is (Click to select) an expansionary output gap in the amount of 100.(DO THIS PART) Autonomous expenditure would need to decrease by________ to eliminate the output gap.What effect will an increase in taxes have on the equilibrium level of output when the IS curve shift to the rightAssume the aggregate demand for a good follows the law of demand (@gª < 0). Suppose the equilibrium in the market for др the good moves from Point A to Point B. Which statement below must be true? Р A Q A. B. C. Demand decreased and supply decreased Demand increased and supply decreased Demand decreased and supply increased D. Demand increased and supply increased E. Demand increased but we don't know if supply shifted F. Demand decreased but we don't know if supply shifted
- Suppose that the macroeconomic equilibrium is determined in the closed economy (AE = C+I +G). Show and explain the effects of an increase in the marginal tax rate (t) on macroeconomic equilibrium.Look at Figure 2. Assume this aggregate demand diagram represents an economy with government, where: a = exogenous consumption b = the marginal propensity to consume t = the tax rate |= investment G = government spending Y = income Figure 2 Aggregate demand AD, AD. 45° Income What is the equation for the aggregate demand schedule ADo? Select one: O ADO = b+ a(1 - t)G +1+ Y O ADO = a + b(1 – 1)Y + 1+ G O ADO = a + b(1 - t) I+ Y+ G O ADO = b+ a(1 – 1)Y + /+ G Next page > ( Previous page PHILIPS2.) Using the point drawing tool, identify the new equilibrium point and label it 'B'. Note: Carefully follow the instructions above and only draw the required objects. b. The worldwide glut gets worse, and the result is a falling price level (deflation) in the United States. Figure B on the right shows an economy in an initial short-run equilibrium at point A. 1.) Using the three-point curved line drawing tool, illustrate the impact of the decrease in input prices due to the worldwide glut. Properly label this curve. 2.) Using the point drawing tool, identify the new equilibrium point and label it 'B'. Note: Carefully follow the instructions above and only draw the required objects. Price level, P ASO A Aggregate output (income), Y ADO K7
- The short-run economic outcome resulting from the increase in production costs is known as——- Suppose now that the government immediately pursues an accommodative policy by increasing government purchases in response to the short-run impact of the higher oil prices. In the long run, given that the government pursues accommodative policy, the output level in the economy will equal ——- level will equal———The graphs illustrate an initial equilibrium for the economy. Suppose that the government increases spending. Use the graphs to show the new positions of aggregate demand (AD), short‑run aggregate supply (SRAS), and long‑run aggregate supply (LRAS) in both the short run and the long run, as well as the short‑run and long‑run equilibriums resulting from this change. Then, indicate what happens to the price level and real GDP (or aggregate output) in the short run and in the long run. Adjust the graph. explain the second image as well and which is right.You will draw four separate Aggregate-Demand/Aggregate-Supply graphs. Each graph will have one curve shift. Be sure to label axis, curves, and equilibrium. Change colors to show the shift and label the new equilibrium. Draw an ADAS graph at equilibrium. Suppose the interest rates on loans on capital goods decrease. Which curve will shift? Draw the new equilibrium. Draw an ADAS graph at equilibrium. Suppose there is an decrease in government spending. Which curve will shift? Draw the new equilibrium. Draw an ADAS graph at equilibrium. Suppose the income of our trading partners increase. Which curve will shift? Draw the new equilibrium. Draw an ADAS graph at equilibrium. Suppose there is widespread concern that prices will continue to rise in the future. Which curve will shift? Draw the new equilibrium.