Assume we are currently in an equilibrium where actual output is equal to potential output. If consumers become more optimistic about the future of the economy, the USD depreciates relative to other currencies, and the Federal Reserve announces an interest rate cut, what do we expect to happen? Output gap stays the same, unemployment decreases, unexpected inflation is unchanged O Output gap increases, unemployment increases, unexpected inflation increases O There isn't enough information to tell O Output gap increases, unemployment decreases, unexpected inflation increases

Assume we are currently in an equilibrium where actual output is equal to potential output. If consumers become more optimistic about the future of the economy, the USD depreciates relative to other currencies, and the Federal Reserve announces an interest rate cut, what do we expect to happen? Output gap stays the same, unemployment decreases, unexpected inflation is unchanged O Output gap increases, unemployment increases, unexpected inflation increases O There isn't enough information to tell O Output gap increases, unemployment decreases, unexpected inflation increases

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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If a temporary increase in government spending only leads to a small decrease in lifetime wealth, the equilibrium real interest rate increases. No effects on the labor market. O the equilibrium current real wage increases. None of the other answers is correct. O the equilibrium output reduces.
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Question 3 When placed in the AD/AS framework, the simple quantity theory of money requires O A horizontal AD curve. O A vertical AS curve. O A horizontal AS curve. O A vertical AD curve. Question 4 If decline in interest rates doesn't lead to increased investment then, O Unemployment will be the same. Real GDP will be the same as before. O Allof the above O AD curve will remain unchanged.
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Consider the basic AD/AS macro model in long-run equilibrium that experiences a positive AD shock. In the short run, the price level and output In the long run, the price level and output O a. Decreases; decreases; decreases further; decreases further. O b. Decreases; decreases; decreases further; returns to potential output. O c. Increases; increases; increases further; increases further. O d. Increases; decreases; increases further; returns to potential output. O e. Increases; increases; increases further; returns to potential output.
Suppose the price of crude oil increases and we produce just enough crude oil for our own consumption. Increasing the interest rate will the existing recessionary gap. If the central bank does not change the interest rate, will adjust and bring the economy back to Yp. Worsen; wages O b. Improve; wages O c. Improve; tax rates O d. Worsen; tax rates
Question 4 Refer to the information provided in Figure 12.1 below to answer the questions that follow. Not yet answered Marked out of 1.00 AD P Flag question AD AD Aggregate output (Y) Figure 12.1 Refer to Figure 12.1. Suppose the economy is at Point A. A can cause a movement to Point D. Select one: O a. decrease in the price level O b. increase in the price level increase in aggregate demand O d. decrease in aggregate demand Price level
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Consider the basic AD/AS macro model. A rise in an input price like the price of oil would be expected to cause a new macroeconomic equilibrium in which the price level Select one: O a. is lower and real GDP higher than in the initial equilibrium. O b. and real GDP are higher than in the initial equilibrium. O c. is higher and real GDP remained the same as in the initial equilibrium. O d. is higher and real GDP lower than in the initial equilibrium. O e. and real GDP are lower than in the initial equilibrium.
The proponents of the hysteresis hypothesis argue that: (i) the short-run and the long-run developments of the economy can be studied separately. (ii) the fluctuations in aggregate demand affect output and employment only in the short run. (iii) negative shocks to aggregate demand can reduce the natural level of output and employment. O a. Only (i) and (iii) b. Only (iii) O c. Only (i) and (ii) O d. Only (ii)
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