AS....Based on the following, explain the impact onAD and AS...Scenario One:(Hypothetical...but let us hope) Both the U.S.budget deficit and national debt shrink to less than 50%of GDP by 2032. Presently, our national debt is morethan 100% of GDP, scary if this continues!Scenario Two:Both the national debt and budget deficits continueaccelerating with national debt swelling to 200% of ourGDP by 2032!As junior economists, explain to your fellow studentswhat happens to the components of AD and AS supplyin both cases and why.

To explain the impact on Aggregate Demand (AD) and Aggregate Supply (AS) for both scenarios, we need…

Answered: AS....Based on the following, explain…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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3. The Government of Wonderland decides to adopt an expansionary fiscal policy increasing its expenditure (G) by $500 billion. They know that the value of MPC is 0.6. By how much should the economy be expected to expand? Answer Here: Gxmpc=$100X0.6 200 Will Crowding Out affect the final outcome of this move? Explain your answer Answer Here:
Please answer the question below: If the current real GDP is P700 billion, which of the following policies would bring the economy to potential output? a. increase government spending by P25 billion b. increase government spending by P100 billion c. increase government spending by P20 billion d. decrease government spending by P100 billion If current real GDP is P700 billion, which of the following policies would bring the economy to potential output? a. decrease taxes by P100 billion b. increase taxes by P100 billion c. decrease taxes by P25 billion d. increase taxes by P25 billion * the attached photo is just connected to the question *
What is the role of the Council Economic Advisers (CEA) as it relates to the effectiveness of the recent U.S. fiscal policy? Find the names and university affiliations of the present members of the CEA. (This may be a helpful website for finding sum of the information relating to the question. https://www.whitehouse.gov/cea/staff)
3.6
The graph below depicts an economy where a decline in aggregate demand has caused a recession. Assume the government decides to conduct fiscal policy by increasing government purchases to reduce the burden of this recession. Fiscal Policy Price Level 160 LRAS AS 140 120 100 80 60 40 20 0 AD 1 AD 80 160 240 320 400 480 560 640 720 800 Real GDP (billions of dollars) Instructions: Enter your answers as a whole number. a. How much does aggregate demand need to change to restore the economy to its long-run equilibrium? $ billion b. If the MPC is 0.6, how much does government purchases need to change to shift aggregate demand by the amount you found in part a? EA billion Suppose instead that the MPC is 0.75. c. How much does aggregate demand and government purchases need to change to restore the economy to its long-run equilibrium? Aggregate demand needs to change by $ billion and government purchases need to change by $ billion.
What is the impact of using Fiscal policy tools on an economy - more specifically aggregate demand and how can they be used to potentially assist (stimulate) an economy experiencing sluggish growth or in a recession. In your discussion, investigate the positive impacts, potential impact of lags, as well as other disadvantages associated with fiscal tools.
Consider the following model: Y=C+I+G, C=c(Y-T), I=i(Y,r) Analyze the effects of expansionary and contractionary fiscal policies and indicate them on a graph.
For each of the following scenarios, determine which time lag is most likely to result when designing and implementing fiscal policy. a. The separation of power demonstrated between the legislative and executive branches of government combined with strong partisanship attitude among our elected politicians. . . . . b. The fact that it takes economists working for the National Bureau of Economic Research months to declare the dates of peaks and troughs. . . . Recognition lag Legislative lag Implementation lag All of these lags c. The time it takes to design and build new infrastructure after these projects have been passed by the legislature. Recognition lag • Legislative lag . Implementation lag All of these lags . Recognition lag Legislative lag Implementation lag . All of these lags
a) What are the three fiscal policy tools and how would each be used to counter a contractionary gap? b) True or False and explain: Fiscal Policy is effective at reducing the duration of an economic contraction. c) True or False and explain: Households always react to tax changes in a predictable manner.
17 The graph below depicts an economy where a decline in aggregate demand has caused a recession. Assume the government decides to conduct fiscal policy by increasing government purchases to reduce the burden of this recession. Price Level 160 140 120 100 80 60 40 20 0 (40, 100) Fiscal Policy LRAS प्रै ======= AD₁ billion AS 80 160 240 320 400 480 560 640 720 800 Real GDP (billions of dollars) $| Suppose instead that the MPC is 0.5. AD Instructions: Enter your answers as a whole number. a. How much does aggregate demand need to change to restore the economy to its long-run equilibrium? $ billion b. If the MPC is 0.6, how much does government purchases need to change to shift aggregate demand by the amount you found in part a? c. How much does aggregate demand and government purchases need to change to restore the economy to its long-run equilibrium? Aggregate demand needs to change by $ billion and government purchases need to change by $ billion.
Refer to the graph below. Assume that the economy is in initial equilibrium where AS₁ intersects AD₁. Then a supply shock occurs that shifts AS₁ to AS2. If the government counters with an expansionary fiscal policy that shifts AD₁ to AD2, then it is most likely that: Price Level ama a 0 AS₂ Multiple Choice 23AS₂AS₁ AD ₂ AD₁ Q3 Q Q Real GDP AS2 will shift to AS₁. AS2 will shift to AS3 and AD2 will shift to AD1. AS2 will shift to AS3.
Price Level aa- 0 X AS AD₂ AD₁ Z Price Level X AS AD₂ AD' AD₁ YZ Real GDP (Billions) Graph A Real GDP (Billions) Graph B Refer to the diagrams. Suppose that government undertakes fiscal policy designed to increase aggregate demand from AD₁ to AD2 and thereby to increase GDP from X to Z. In terms of graph B, which of the following might explain why GDP increases to Y rather than to Z? decrease in the saving schedule crowding-out effect reduction in tariffs imposed by our trading partners depreciation of the dollar

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