What is the likely impact of expansionary policies when the economy is operating at full capacity on the vertical portion of the AS curve? Illustrate.
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- What is the likely impact of expansionary policies when the economy is operating at full capacity on the vertical portion of the AS curve? Illustrate.
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- Assume an economy is currently operating at point A and answer the following question. Q. What key policy recommendations would you make for an economy like this one that is currently operating at point A? Illustrate using the IS-LM model how the policy recommendations you provide will impact the economy. On your diagram indicate the new point that the policy takes the economy to and label this as point B.Assume an economy is currently operating at point A. Illustrate using the IS-LM model how the policy recommendations you provide in c) will impact the economy. On your diagram indicate the new point that the policy takes the economy to and label this as point B.The accompanying graph represents the Keynesian cross for a country, where the planned aggregate spending line (Planned AE) is graphed against a 45° line. Suppose that there is an autonomous decrease in aggregate spending of $40 billion in this country. a. Show this change on the graph (you can drag and shift the whole line or either of the endpoints) and answer the following two questions. b. What is the initial unplanned inventory investment? If the number is negative, be sure to include a negative sign. billion dollars c. After firms adjust their production, what is the total change in real GDP? If the number is negative, be sure to include a negative sign. following two questions. vay and answer the b. What is the initial unplanned inventory investment? If the number is negative, be sure to include a negative sign. billion dollars c. After firms adjust their production, what is the total change in real GDP? If the number is negative, be sure to include a negative sign. billion…
- To answer some parts of this question, you may need to refer to the diagram displayed below. The economy begins at the long-run equilibrium at point A, where Yo is the economy's potential GDP. LRAS P AS2 ASo AS1 В F Po AD1 ADo AD2 Y Yo Suppose the price of oil decreases in the Canadian economy. Ignore the fact that Canada is a net exporter of oil. In response to this shock, the AD curve will [ Select ] If the price level in the economy doesn't adjust (remains at price Po), there is [ Select ] goods and services in the economy. For the economy to return to equilibrium at point [ Select ] the price level must [ Select ] Hint: you can rely on your understanding of market equilibrium from microeconomics. At the equilibrium point, the economy is experiencing v [ Select ] GDP at its potential level a recessionary gap an inflationary gapFrom a Real Business Cycle (RBC) point of view, what is the impact of a contractionary policy on an economy?Why might it be important for policy makers to know which in zone of the SRAS curve the economy is?
- what is the impact of a contractionary policy on the U.S. economy from a new keynesian point of view? Show the impact using a graph.10. In an AD/AS model, the point where the economy has excess capacity is called the: (A) Keynesian zone of the AS curve (B) intermediate zone of the AS curve (C) neoclassical zone of the AS curve (D) crossing point of the potential GDP lineSuppose that in 2011, Quarterville’s government cuts taxes. Show how this event will change equilibrium output and price level by shifting either the SRAS or AD curve.
- Why the AD CURVE has a negative slopeSuppose that in 2008, Sanaton’s government increases taxes. Show how this event will change equilibrium output and price level by shifting either the SRAS or AD curve, and then answer the questions below. Did equilibrium output increase or decrease?Increase/Decrease Did equilibrium price increase or decrease?Increase/DecreaseIn the AD/AS model assume 2019 began with potential real GDP = $19.7 trillion, while actual real GDP = $19.0 trillion and the Price Level (GDP Deflator) = 210. A year later the Price Level = 214 and actual real GDP = $18.9. Based on their relative effects on the AD/AS model, which of the following scenarios best explains this new outcome? The effect of %3D Group of answer choices an increase in government spending is MORE than the effect of decreased electricity prices. an increase in wages is LESS than the effect of a decrease in government spending. a decrease in oil prices is MORE than the effect of positive consumer expectations. an increase in inflationary expectations is MORE than the effect of increased government spending.