Assume that output began at its natural level. By using AD-AS (upward sloping) and Phillips curves, analyze the short and long run effects for each of these situations: a) The government decreases the investment tax credit in order to discourage the investment. b) The Government increases the assistance to low income family through various stimulus package due to the impact of Covid 19 Pandemic on this groups' income. c) The evolution of technological advancement brings about great impact to the economy.
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- Assume that output began at its natural level. By using AD-AS (Upward sloping) and Philips curves (graphs), analyze the short and long-run effects for each of these solutions. a. The government decreases the investment tax credit in order to discourage investment. b. The Malaysian Government increases assistance to b40 through various stimulus package due to the impact of the COVID-19 pandemic on this group income. c.the evolution of technological advancement brings about a great impact on the economy.Consider a one-period economy which experiences the destruction of some of the nation’s capital stock (say through a hurricane is de- stroyed). How should this effect equilibrium, consumption, output and labor supply? Now, let’s say the government tries to offset some of the declines in capital on output and hours worked by increasing govern- ment spending. What is the likely outcome of this policy intervention in terms of consumption? In our model, the affects of changes on wages are ambiguous because the income and substitution effects move in opposite directions. How do (many) macroeconomists deal with this ambiguity in terms of study- ing business cycle? How do economists resolve this ambiguity when studying long term economic development? Consider an economy with a straight line PPF. Show how an increase in government spending paid for by an increase in lump sum labor taxes affects outcomes. Do the same for an increase in government spending financed by a proportional income…The primary goal of effective macroeconomic policies is/ are ......................................... Select one: A. Enhances prospects for growth and improved living standards B. To reduce uncertainty and risk in economic decision-making C. Have an impact on how income is distributed across economic classes D. All of the given options
- Give an example of a concept you think may be associated with strong macroeconomic performance. Explain why this is the case. Use real-world examples and explanations. concepts lists - economics and the economic way to thinking - economic theory - scarcity -opputunity cost - market and competitive markts -supply -how markets reach equilibrium price and quantitySuppose an economy's production is defined by the following neoclassical production function: Y=3K1/3L2/3. Derive the labor demand equation by expressing labor, L, as a function of the real wage, w=W/P Don't answer by pen paper and don't use chatgpt otherwise we will give dounvoteConsider the market for loanable funds. Suppose the demand for loans is given by i= 40-Q+π, and the supply of loans is given by i= -30+Q+π, where π represents inflation. In the case of π=5, what is the equilbrium quantity of loans and what is the corresponsing interest rate? Q*=70, i*=45 Q*=10, i*=35 Q*=35, i*=10 Q*=45, i*=70
- Assume a person is attempting to maximize utility which depends on spending towards consumption and hours towards leisure subject to a budget constraint that expenditure on consumption cannot exceed labor earnings and a time constraint that hours towards leisure and towards working cannot exceed 24 hours. Suppose labor earnings is subject to a baseline marginal tax rate structure and new legislation proposes decreasing these marginal tax rates. Under these assumptions, what are some testable hypotheses on consumption and the decision to work at a macroeconomic-level? a. Generally speaking, a decrease in marginal tax rates is predicted to increase consumption, so GDP is expected to rise, and to increase hours working, so unemployment is expected to fall. b. Generally speaking, a decrease in marginal tax rates is predicted to decrease consumption, so GDP is expected to fall, and to increase hours working, so unemployment is expected to fall. c. Generally speaking, a decrease in…Assume that an economy operates according to the sticky-wage model. The nominal wagewas set to make labor supply and labor demand equal when the expected price levelequaled 120 (as measured by the consumer price index).a. Use a graph of the labor market to illustrate what happens to the quantity oflabor employed if the actual price level over the time period when wages arestuck equals 110.b. Use a graph of the production function to illustrate how the quantity of outputproduced changes if the actual price level equals 110 when the expected pricelevel is 120.c. Given the unexpectedly low price level, will this economy be operating above,below, or at the natural rate?2) The below five graphs show the development of key macroeconomic variables over the scope of three years in a certain country. Use them to draw an IS-LM-PC graph that captures the development in this country. Explain carefully what has happened. G Y t 3) China currently (2016) has a household saving rate of about 36 %. It has never been below 27 % in the last 30 years. What role do you think this high saving rate has for China's economic success? It has been argued that the low standard of living in many less developed countries depend on their poor institutions. Explain carefully what kind of "institutions" this argument refers to. 4) 5) The Swedish Fiscal Policy Council discusses public debt policy in a low interest environment in their latest report. The argue that "there are strong arguments in favour of low public debt despite low interest rates. For private operators, it may be rational to increase debt in a low interest rate climate, but this is not necessarily the case for…
- Is fiscal policy, say an increase in government expenditures (G), effective according to the Real Business Cycle (RBC) theory? If it is, should it be used? Explain by using production function, labor market, goods market and asset market equilibrium tools.An economic theory regarding the effect of an economic variable on another when all other factors stay constant is called _____. laissez faire Keynesian e pluribus unum Ceteris ParibusMost rms borrow money to use for investment. If these rms cannot get loans, they have to reduce their level of investment. Suppose there is a credit crunch like the one experience by many Korean rms in 1997 Asian nancial crisis. The credit crunch limits the amount of money available to be loaned. Hence, rms cannot borrow as much as they would optimally chose to. As a result, the investment schedule shifts to the left. (a) In the Keynesian model, what happens to output and interest rate in the short run? What would happen in the long run? (b) In the Keynesian model, what monetary policy can the BOK (central bank) follow to counter the recession caused by credit crunch? (That is, the BOK wants to achieve the same level of output as before the credit crunch). What would happen in the long run? (c) How would your answers in (a) and (b) be dierent if the Classical model applied?