gi i need help for question 8 i don,t understand how to do that and also this question is for macroeconomic Use the figure below to answer the following questions.Price level (GDP deflator, 2002 =100)LAS130SAS120110100AD190ADo12.012.513.013.514.0Real GDP (trillions of 2002 dollars)Figure 26.3.5is shown by point B and how large this the gap in terms of Real GDP? V6) Refer to Figure 26.3.5 above. What type ofShort-run equilibrium is at such a price level where short-run aggregate supply equals aggregate demand.gapWhen short-run equilibrium is at point B.Real GDP is $13.5 billion.Potential GDP is $13 billion.Real GDP is greater than potential GDP, thus there is an inflationary output gap.Size of the gap = Real GDP - Potential GDPSize of the gap = $13.5 billion - $13 billion%3DSize of the gap = $0.5 billion|%3D position of SAS and what type of inflation will result?In long run, the economy self adjusts to come back to the potential level of FGDP.In long run, as price expectations adjust, producers of goods and services realize that not only the prices of the goods and services theysell have increased but also the prices of input goods have increased.Thus there is also an increase in the cost of production. As producers realize that there is also an increase in the cost of production, theyget demotivated, and thus this leads to a decline in the production of goods and services causing short-run aggregate supply to fall.The decline in short-run aggregate supply cause the short-run aggregate supply curve to shift left from SAS to SAS'The equilibrium shifts from B to C.Price level increases from 110 to 120.Real GDP decreases from $13.5 billion to $13 billion.An increase in the price level means we have inflation in the economy. An increase in price level is because of an increase inthe cost of production (increase in the price of input goods). Thus the type of inflation is cost-push inflation.8) As a result of COVID-19, the Government of Canada has been actively using a discretionary fiscal stimulus policy. Using theAggregate Supply – Aggregate Demand model, illustrate the intended impact of this policy on Aggregate Demand. Has the fiscal stimuluspolicy been effective? Why or why not? When the discretionary fiscal stimulus policy has ended, what actions with respect to the budget,will the government have to consider to address the debt level resulting from the discretionary fiscal stimulus policy?

Expansionary fiscal policy is implemented by the government usually when the economy is facing a…

8) As a result of COVID-19, the Government of Canada has been actively using a discretionary fiscal stimulus policy. Using the Aggregate Supply – Aggregate Demand model, illustrate the intended impact of this policy on Aggregate Demand. Has the fiscal stimulus policy been effective? Why or why not? When the discretionary fiscal stimulus policy has ended, what actions with respect to the budget, will the government have to consider to address the debt level resulting from the discretionary fiscal stimulus policy?

8) As a result of COVID-19, the Government of Canada has been actively using a discretionary fiscal stimulus policy. Using the Aggregate Supply – Aggregate Demand model, illustrate the intended impact of this policy on Aggregate Demand. Has the fiscal stimulus policy been effective? Why or why not? When the discretionary fiscal stimulus policy has ended, what actions with respect to the budget, will the government have to consider to address the debt level resulting from the discretionary fiscal stimulus policy?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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