Assume the economy is in long-run equilibrium in 2019. Use the Aggregate Demand and Aggrecate Supply Model (AS-AD) to show and explain the impact of the following changes in 2020: a. The pandemic in 2020 leads to required government shutdowns of non-essential businesses which results in high unemployment. b. The federal government responds with the largest fiscal stimulus package in history (CARES Act) which provides additional unemployment insurance, stimulus checks and subsidies for business. c. The Federal Reserve uses monetary policy to cut interest rates to near zero to make borrowing cheaper. d. International flights into the US are limited, decreasing the number of foreign tourists visiting. e. What is the net impact of all four changes taken together?

Assume the economy is in long-run equilibrium in 2019. Use the Aggregate Demand and Aggrecate Supply Model (AS-AD) to show and explain the impact of the following changes in 2020: a. The pandemic in 2020 leads to required government shutdowns of non-essential businesses which results in high unemployment. b. The federal government responds with the largest fiscal stimulus package in history (CARES Act) which provides additional unemployment insurance, stimulus checks and subsidies for business. c. The Federal Reserve uses monetary policy to cut interest rates to near zero to make borrowing cheaper. d. International flights into the US are limited, decreasing the number of foreign tourists visiting. e. What is the net impact of all four changes taken together?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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