An economist for the ruritanian ministry of economy recommends a tax to households of 20 billion. The country currently has a savings rate of 15%. On a seperate sheet of paper. graph a notional AD/AS model and explain what happens in the long run

An economist for the ruritanian ministry of economy recommends a tax to households of 20 billion. The country currently has a savings rate of 15%. On a seperate sheet of paper. graph a notional AD/AS model and explain what happens in the long run

Macroeconomics

13th Edition

ISBN:9781337617390

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter10: Kenesian Macroeconomics And Economic Instability: A Critique Of The Self Regulating Economy

Section: Chapter Questions

Problem 3WNG

See similar textbooks

Related questions

Q: According to the AS-AD model, which of the following is true about output when there is an increase…

A: "Macro-economic equilibrium is attained at a point where aggregate demand (AD) equates(intersects)…

Q: Why might it be important for policy makers to know which in zone of the SRAS curve the economy is?

A: SRAS (Short run aggregate supply): It refers which shows the positive relationship between the…

Q: Assume that the general level of prices increases. Which of the following best describes what…

A: The aggregate supply is the total amount of services and commodities that firms in an economic plan…

Q: Question 5 A decrease in one of the components of real GDP, such as Exports will cause the AD curve…

A: In macroeconomics, economic fluctuations are generally studied using the concepts of aggregate…

Q: What is the Keynesian zone of the SRAS curve? How much is the price level likely to change in the…

A: ANS According to Keynes demand will create its own supply. If aggregate demand changes then would…

Q: Define the three ranges of the aggregate supply curve in the AD/AS framework

A: The aggregate supply curve refers to the total amount of goods and services a producer is willing to…

Q: A policymaker claims that tax cuts led the economy out of a recession. Can we use the AD/AS diagram…

A: A reduction in the tax rate will increase the AD, because individuals will have more money in their…

Q: Explain fully why the AD curve has a negative slope.

A: Demand for a good is defined as the amount of that good that consumers are willing and able to buy…

Q: Suppose concerns about the size of the federal budget deficit lead the U.S. Congress to cut all…

A: As technology growth falls, production becomes less efficient. This leads producers to produce less,…

Q: Q.1.10 Strikes across a wide range of industries in South Africa in the first half of 2020 can be…

A: Aggregate demand (AD) and aggregate supply (AS) models shows the market equilibrium that occurs at…

Q: An increase in consumer confidence would cause the AD curve to:

A: The Law of demand refers to the inverse or negative relationship between the quantity demanded of a…

Q: include a graph that shows where Canada currently is on the business cycle. Also include an AD-AS…

A: The economies around the world works according to the changes in the changes in their consumption…

Q: In the Keynesian AS/AD framework, an increase in government spending would lead to ____ pricelevels…

A: Equilibrium in the Keynesian AS/AD framework at the intersection of AD and AS curves.

Q: The Qatari government is increasing government purchases to finish the construction of 2022 World…

A: In short-run:- When Qatari government increases its purchases to finish the construction of 2022…

Q: there . can you please assist on the folloiwng question below Q.1.1 An increase in the price of oil…

A: At the point when AD or SRAS bends shift, we call these "shocks". Why a shock? Since the change come…

Q: From a spending model perspective, explain the causes of a recession

A: Recession refers to the situation where the growth rate of GDP is become negative between the two…

Q: Which of the following might cause the AD curve to shift to the right? an increase in…

A: The AD bend, like most typical demand bends, slopes downward from left to right. Demand rises or…

Q: Consider a standard AD-AS model. If the marginal propensity to consume is zero, a temporary tax cut…

A: Here, MPC=0, which means all the income is saved or Income=MPS As we can see the purple line is the…

Q: Which of the following is Aggregate Demand (AD) directly related to in an AS/AD model? a)…

A: In the AS-AD model, aggregate demand describes the components of expenditure method of computing GDP…

Q: How would a dramatic increase in the value of the stock market shift the AD curve? What effect would…

A: An expansion in the value of the stock market would cause people to feel richer and in this way,…

Q: Explain and illustrate how the interaction of the AD and SRAS curves deter

A: Since you have posted a question with multiple sub-parts, we will solve first three subparts for…

Q: Explain the fiscal and monetary policy used in the attached document using IS model and the AD model

A: Policy: It refers to the policies that is used by the government for the economic stabilization. The…

Q: The AD curve can be shifted by...

A: AD Curve: The aggregate demand (AD) curve represents the total goods and services demanded by the…

Q: In an AD-AS model, one can distinguish between two broad types of macroeconomic policy measures,…

A: Macroeconomics is a part of economics that deals with production, decision and allocation concerning…

Q: using the Keynesian AD-AS diagram how can the economy be in a state of equilibrium at any level of…

A: The equilibrium is an economic state where Aggregate Demand (AD) intersects Aggregate Supply (AS)…

Q: Notice the major differences between our Keynesian Cross (in your chapter 9 appendix) and the Macro…

A: When short run aggregate supply (SRAS) equals aggregate demand, it is called short run macroeconomic…

Q: The Aggregate Expenditure or Keynesian macroeconomics model is based upon the theory that the level…

A: The total monetary or market value of all finished goods and services produced within a country's…

Q: The Qatari government is increasing government purchases to finish the construction of 2022 World…

A: The economies around the globe tend to have a limit to the amount of resources they have, while the…

Q: An increase in the price of oil is an example of a negative supply shock. Use the AD-AS model graph…

A: In an economy, when there is an increase in the price of oil, it will lead to increase the cost of…

Q: Tax cuts are more effective in generating the economy when the economy is in recession compared to…

A: The reduction in taxes that is being made by the government is known as a cut in taxes. This leads…

Q: Derive the AD curve using the IS - LM framework with detailed explanation.

A: Assumptions on which AD curve is drawn: The nominal Money Supply (M) is constant. Only Price level…

Q: Assume that an economy is initially operating at the natural rate of output(full employment output).…

A: The reduction in government spending reduces aggregate demand in the economy. This creates different…

Q: Which of the following statements is TRUE regarding the Aggregate Expenditure model?

A: Answer 33. Aggregate Expenditure Model is referred to as a model which relates to the components of…

Q: The government of South Africa responded to the COVID 19 pandemic by implanting a number of…

A: The pandemic has slowed down the economy of the country. Resulting there is lower demand and high…

Q: If the economy is operating in the Keynesian zone of the SRAS curve and aggregate demand falls,what…

A: Keynes postulated that there is a difference between the short-run and the long-run supply curve of…

Q: Suppose that an economy is currently in its long run equilibrium. Suppose that the government…

A: Aggregate demand (AD) refers to the total planned expenditure which all the sectors of the economy…

Q: What is the short run aggregate supply curve

A: The short run aggregate supply curve is an upward loping curve, because quantity supplied is…

Q: Three ways to increase Consumption which would cause a shift right in the AD curve would be or or

A: At different price levels, the aggregate demand curve depicts the total quantity of all commodities…

Q: Using the AD/AS model construct two graphs that show how a recession can occur? Explain how…

A: A recession is a time of declining economic execution across a whole economy that goes on for a long…

Question

An economist for the ruritanian ministry of economy recommends a tax to households of 20 billion. The country currently has a savings rate of 15%.

On a seperate sheet of paper. graph a notional AD/AS model and explain what happens in the long run .

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps with 1 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

Using the AD/AS model, what would be an explanation for observing an increased price level and a decreased real GDP? Group of answer choices wages have increased. productivity has increased. the money supply has increased. the money supply has decreased.
Suppose you are Herb Stein, Chair of Economic Advisors to President Ford. OPEC has just quadrupled the price of oil. The entire economy uses oil in manufacturing (exaggeration, but not a big one), consequently the costs reflected by the AS curve dramatically increase. Using the AD/AS model, what happens to output and prices? Same role, a recession with inflation now exists(stagflation), both are serious, 10% u/e, 14% inflation. You are thinking of proposing a solution to the recession, the negative GDP gap is $300 billion, the MPC is .75. Businesses won't increase Investment because of fear of losses You remember from your econ 101 class, that there is a multiplier effect for Government Expenditures. If you just want to fix this negative gap, how much Government expenditure would you propose? Same role, Using the AD/AS model, what would you expect to be the result of your proposal in the above question, with regard to output, and inflation? Does the degree of the shape of the AD/AS…
Use AD/AS model to solve the following problems. You have to DRAW and explain AD/AS model. Hydraulic fracturing ( fracking) has the potential to significantly increase the amount of natural gas produced in the United States. Assume a large percentage of factories and utility companies use natural gas. Scenario A: the economy is operating at full employment level of output. Scenario B: The economy is operating below full employment. what will happen to output, the price level, and employment as fracking becomes more widely used? LO1: Analyze the dynamic economic environment using economic notions and theories. LO2: Explain consumer and producer behavior and economic decision-making of economic units under different market structures. LO3: Describe and interpret measures of macroeconomic performance including potential efficiencies, government actions, and market forces.
In the AD/AS model, the multiplier magnifies the effect of autonomous spending, for example government spending, on the budget deficits aggregate demand tax receipts potential GDP
Hayek says that markets will heal themselves and that government should not intervene. How does the AD-AS model reflect Hayeks idea that governments cannot increase real GDP beyond the level that the free market economy is able to produce?
Hayek says that markers will heal themselves and that government should not intervene. How does the AD-AS model reflect Hayek's idea that governments cannot increase real GDP beyond the level that the free market economy is able to produce
How is long-term growth illustrated in an AD/AS model?
"Tax cuts are more effective in generating the economy when the economy is in recession compared to at full employment." True or False? Show and explain your answer based on the AD-AS model.
Graphically derive and explain the AD curve.
Using the AD/AS model construct two graphs that show how a recession can occur? Explain how discretionary fiscal or monetary policies can be used to moved the economy out of recession?
Use the AD-AS model diagram to address the effects of increasing government expenditure in the short-run and in the long-run equilibrium.
Create a graph that shows where Mexico currently is on the business cycle. Be sure to include an AD-AS Model graph that shows if the economy is currently experiencing a recessionary gap, expansionary gap, or long run equilibrium.