5. Suppose that the economy fell into a recession. The central bank decided to take a monetary policy to help the economy. Which tool from below would the central bank use for the policy? Selling bonds to private banks, lowering reserve ratio or reducing loans to private banks And to which direction the policy shift the AD curve: Left or Right? Action: Direction:

Q: For the next 5 questions, assume that the economy starts in equilibrium: -the output is 1 million…

A: The equilibrium level of price and output in an economy is determined by the aggregate demand and…

Q: Assume that initially everyone expected the price level to stay the same when the Federal Reserve…

A: here, AS is Aggregate supply AD is Aggregate demand

Q: AD or AS a. A decrease in the personal income tax rate b. An increase in Government Spending c.…

A: Hi! thanks for the question but as per the guidelines, we answer only one question up to three…

Q: 8. The micro-founded version of the sticky price model is summarized in the following equation P =…

A: The sticky wage model is the one that assumes that the prices and wages in the economy remain the…

Q: “The appreciation of the dollar from 2012 to 2017 had anegative effect on aggregate demand in the…

A: Meaning of Aggregate Demand: Aggregate demand refers to the sum total of demand for all goods and…

Q: I only need numbers 4 and 5 to be answered. Using a correctly labeled graph of the long-run…

A: 4. The real output will fall because When a country's central bank takes actions to move the…

Q: However the wuestion assume that the economy starts in equilibrium: -the output is 1 million -the…

A: In the given scenario, the output is 1 million. Now, when the federal reserve decides to buy back…

Q: 2. The impact of a contractionary monetary policy (a) On the money markets (b) On the AD-AS…

A: Contractionary monetary policy refers to the policy changes that results in decrease in money supply

Q: 2. The graph below shows the AD-AS model in short-run equilibrium at a price level, Po, and a level…

A: The aggregate demand in the economy shows the total spending done by various sectors of the economy…

Q: The following graph shows the short-run aggregate supply (SRAS) and aggregate demand (AD) curves for…

A: DISCLAIMER  “Since you have asked multiple question, we will solve the first question for you. If…

Q: 2. The graph below shows the AD-AS model in short-run equilibrium at a price level, Po, and a level…

A: The aggregate demand in the economy shows the total spending done by various sectors of the economy…

Q: The graph below depicts an economy where an increase in aggregate demand has caused inflation.…

A: A government generally regulates the market through fiscal measures, the measures can be of two…

Q: Initially, an economy is in long-run equilibrium with a real GDP of $4 trillion. Suppose that the…

A: Aggregate demand is the finished goods and services total demand that is produced in the economy. It…

Q: 4) Suppose that initially the economy is at equilibrium at a level of output, which is lower than…

A: The AD (Aggregate Demand) curve represents the relationship between the total quantity of goods and…

Q: 5. Assume the government follows a Keynesian approach and alters spending to return the economy to…

A:

Q: Question 5 Keynesians believe O that the government should pursue active policies to stabilize…

A: When studing economics, it can be seen that different schools of economic thoughts have different…

Q: 1. Explain how the effectiveness of fiscal and monetary policy depends on whether the policy change…

A: Monetary Policy:Monetary policy refers to the actions and decisions made by a country's central bank…

Q: 2. Give examples of factors that decrease short-run aggregate supply. Which way does the SAS curve…

A: Aggregate supply is the total output that the producer is willing to produce and sell at different…

Q: Long Run: Draw a long run aggregate supply curve. Draw an aggregate demand curve and label it ADI.…

A: Concept Price can alter along the LRAS, but output cannot since it reflects full employment output.…

Q: Let's say the Aggregate Demand is less than potential output. Our goal is to keep the short run…

A: Option B is correct Increase interest rates and increase taxes

Q: 5. Short-run shocks in the AD-AS model The following graph shows an economy that is initially in…

A: Aggregate demand is sum of the consumption expenditure, investment expenditure, government…

Q: Consider two economies - Avalon and Eternia. In Avalon, the central bank uses interest rates to…

A: ***Since the student has posted multiple questions, the expert is required to solve only the first…

Q: Consumers would buy more cars, houses and other "big ticket" items that are usually bought "on…

A: DISCLAIMER  “Since you have asked multiple question, we will solve the first question for you. If…

Q: Which of the following scenarios would result in a decrease in Aggregate Demand? A decline in…

A: Aggregate demand includes the four main components: consumption, government expenditure, investment,…