ces Refer to the table below. Real Output Demanded, Original, Billions $506 508 510 512 514 Price Level 110 105 percent 100 95 90 Decrease Real Output Supplied, Billions Suppose that aggregate demand increases such that the amount of real output demanded rises by $7 billion at each price level. Instructions: Enter your answers as a whole number. a. By what percentage will the price level increase? billion $ 513 512 510 507 502 Will this inflation be demand-pull inflation, or will it be cost-push inflation? Demand-pull inflation ✓ b. If potential real GDP (that is, full-employment GDP) is $510 billion, what will be the size of the positive GDP gap after the change in aggregate demand? $ c. If government wants to use fiscal policy to counter the resulting inflation without changing tax rates, would it increase government spending or decrease it?

ces Refer to the table below. Real Output Demanded, Original, Billions $506 508 510 512 514 Price Level 110 105 percent 100 95 90 Decrease Real Output Supplied, Billions Suppose that aggregate demand increases such that the amount of real output demanded rises by $7 billion at each price level. Instructions: Enter your answers as a whole number. a. By what percentage will the price level increase? billion $ 513 512 510 507 502 Will this inflation be demand-pull inflation, or will it be cost-push inflation? Demand-pull inflation ✓ b. If potential real GDP (that is, full-employment GDP) is $510 billion, what will be the size of the positive GDP gap after the change in aggregate demand? $ c. If government wants to use fiscal policy to counter the resulting inflation without changing tax rates, would it increase government spending or decrease it?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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QUESTIONS Which of the following can create demand-pull inflation? O Excessive aggregate spending supply disruptions caused by global pandemics and regional wars O Sharply rising oil prices Higher labor costs Recessions and depressions
K Suppose in 2018, the United Kingdom economy was at full employment Nominal GDP was £2,730 billion, the real interest rate was 3 percent per year, the inflation rate was 3 percent a year, and the price level was 130 Calculate the nominal interest rate In the long run, if the real interest rate remains the same but the inflation rate increases to 6 percent a year, how does the nominal interest rate change? The nominal interest rate is percent a year In the long run, if the real interest rate remains the same but the inflation rate increases to 6 percent a year, then the nominal interest rate perce
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Choose the statement that about deflation that is incorrect. A. The price level falls if aggregate supply increases at a persistently slower rate than aggregate demand. B. An economy experiences deflation when it has a persistently falling price level. OC. A one-time fall in the price level is not deflation. O D. During a period of deflation, the inflation rate is negative.
The CPI inflation rate from 1982 to 2002 is ________ and from 2002 to 2022 is ________. The difference in the rates of inflation is ________. A. 46.9 percent; 33.7 percent; -13.2 percentage points B. 46.9 percent; 33.7 percent; -28.1 percentage points C. 88.4 percent; 50.9 percent; -42.4 percentage points D. 88.4 percent; 50.9 percent; -37.5 percentage point
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