18. Use the AD/AS model to illustrate the following. Draw 6 graphs by hand. Show how the AD or the AS curve shift and in what direction (left or right). Also state what happens to equilibrium real GDP (Y), employment, and the equilibrium price level. [Note: Use the SRAS curve, not the LRAS.] a. an increase in government spending and/or transfer payments b. restrictive fiscal policy c. expansive monetary policy

18. Use the AD/AS model to illustrate the following. Draw 6 graphs by hand. Show how the AD or the AS curve shift and in what direction (left or right). Also state what happens to equilibrium real GDP (Y), employment, and the equilibrium price level. [Note: Use the SRAS curve, not the LRAS.] a. an increase in government spending and/or transfer payments b. restrictive fiscal policy c. expansive monetary policy

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter20: Exchange Rates And The Macroeconomy

Section: Chapter Questions

Problem 3TY

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Question

18. Use the AD/AS model to illustrate the following. Draw 6
graphs by hand. Show how the AD or the AS curve shift and
in what direction (left or right). Also state what happens to
equilibrium real GDP (Y), employment, and the equilibrium
price level. [Note: Use the SRAS curve, not the LRAS.]
a. an increase in government spending and/or transfer
payments
b. restrictive fiscal policy
c. expansive monetary policy
d. increase in investment according to Keynesians
e. increase in investment according to supply-side economists
f. a stock market crash

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