) Consumers use cash in transactions more frequently in response to an increase in identity theft. As a result of this shock, the IS [moves/doesn't move] and the LM [moves/doesn't move]. In the short run (i.e. when prices are sticky), Y [increases / decreases], r____[increases / decreases], C_--_[increases / decreases], planned investment -_[increases / decreases], the unemployment rate [increases / decreases]. If the central bank wanted to help the economy return to potential GDP, it could implement (expansionary / contractionary] monetary curve curve policy

) Consumers use cash in transactions more frequently in response to an increase in identity theft. As a result of this shock, the IS [moves/doesn't move] and the LM [moves/doesn't move]. In the short run (i.e. when prices are sticky), Y [increases / decreases], r____[increases / decreases], C_--_[increases / decreases], planned investment -_[increases / decreases], the unemployment rate [increases / decreases]. If the central bank wanted to help the economy return to potential GDP, it could implement (expansionary / contractionary] monetary curve curve policy

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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"The oil price run - up of 2007 - 08 was caused by strong demand confronting stagnating world production. Although the causes were different, the consequences for the economy appear to have been very similar to those observed in earlier episodes, with significant effects om overall consumption spending and purchases of domestic automobiles in particular. The experience of 2007 - 08 should thus be added to this list of recessions to which oil prices appear to have made a material contribution". Oil price shocks have an evident impact on the short run aggregate supply curve. With the help of a graph demonstrate how rising oil prices affect the SRAS and explain what other factors can cause this shift.
14) The level of aggregate output demanded will increase if A) the money supply is increased. C) All, A, B, and D, are very likely. B) the interest rate is reduced. D) net taxes are reduced.
1) Suppose gold (G) and silver (S) are substitutes for each other because both serve as hedges against inflation. Suppose also that the supplies of both are fixed in the short run (Qg = 75 and Qs = 300) and that the demands for gold and silver are given by the following equations: PG = 975 – QG + 0.5Ps and Ps = 600 – Qs + 0.5PG. What are the equilibrium prices of gold and silver?
3. Assume the aggregate demand curve is given by Y 11.5 – 0.6n and the aggregate supply curve by t = 2.5 + 0.6(Y – 8). a. Find the short-run equilibrium level of output and inflation and plot your results in a graph. b. Is the short-run equilibrium you have found in (a) also a long-run equilibrium? If not, how would the self-correcting mechanism ensure that long-run equilibrium is attained? Answer this question with the help of a graph.
(a) Suppose that, in a liquidity trap, bank reserves are less liquid than government debt. If the central bank conducts an open market sale of government debt, what will be the effect on the price level? Use a diagram, explain your results. (b) Suppose that there is a decrease in the price of housing, which the central bank judges is a temporary asset price decrease. In the New Keynesian model, determine the central bank's optimal response to this asset price increase, using diagrams. (c) Suppose initially that inflation is at the central bank's target and the output gap is zero. Then, government spending goes up. Determine, with the aid of diagrams, how the degree of price stickiness affects the central bank's optimal response and explain your results.
Using SDM, show the impact of the demand shocks on the equilibrium of the auto market. Graphically show the change in consumers, producers, and total surplus. Notes: label the relevant areas of the graph and show the change in consumers, producers, and total surplus.
Solve all this question......you will not solve all questions then I will give you down?? upvote.........
Suppose that changes in bank regulations reduce the availability of credit cards so that people need to hold more cash. Show how this event affects the demand for money. Value of Money (1/P) Supply True Quantity of Money If the Fed does not respond to this event, the price level will False Demand Demand Supply True or False: If the Fed wants to keep the price level stable, it should reduce the money supply. (?)
Question 14 Suppose investment spending falls and as a result firms reduce their level of production of good and services. We call this a supply shock. True False
If the economy is in a long-run equilibrium when the Federal Reserve decides that its inflation target is too low and chooses to raise it, ________. A) it would likely conduct a tightening of monetary policy by raising the real interest rate for any given inflation rate B) it would likely conduct an easing of monetary policy by lowering the real interest rate for any given inflation rate C) it would likely conduct an easing of monetary policy where the real interest rate would increase due to the ensuing decrease in aggregate demand D) it would likely conduct a tightening of monetary policy where the real interest rate would increase due to the ensuing increase in aggregate demand E) none of the above
None
1. Consider an economy in long-run equilibrium at P1,Y*. Demand for money decreases. What will be the new long-run equilibrium? Group of answer choices Price will be higher than P1 and output will be equal to the natural output. Price will be higher than P1 and output will be smaller than the natural output. 2.What should be the optimal policy response to a negative demand shock according to a neoclassical economist? Group of answer choices The government should lower the interest rate to shift the AD to the right The central bank should enact an expansionary monetary policy to move back the AD to the initial position The government should lower wages to accommodate the adjustment of the AS curve None. The economy will self adjust and there is no need of intervention. Price will be higher than P1 and output will be higher than the natural output. Price will be lower than P1 and output will be equal to the natural output.