Continuing the situation in the above question (i.e. suppose the economy begins in a long-run equlibrium at potential output when the government decides to alter speand/or taxes to make the budget deficit smaller). What would be the long-run impact of this action?000unemployment and investment spending are unchangedunemployment is higher and investment spending is unchangedUnemployment is unchanged, but there is more investment spendingunemployment is higher and there is less investment spending

Explanation:Reducing the budget deficit can be achieved through two main methods:Decreasing Spending…

Answered: Continuing the situation in the above…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Read Eye on Booms and Busts. Explain why the NBER reported that the 2008 recession began before real GDP had fallen for two successive quarters. The NBER Committee OA. anticipated the recession was going to happen because real GDP clearly peaked in 2007 OB. based its decision on peaks in the data on real personal income, real manufacturing, wholesale and retail sales, industrial production, and employment, which all peaked between November 2007 and June 2008 OC. made an error because a recession cannot occur unless real GDP falls for two successive quarters O D. saw that the business cycle trough occurred in the second quarter of 2009, so it was obvious that the recession began in 2008
DIREC TIONS: please complete the practice questions on separate paper by hand. AD/AS can show the economy at three different points: • Negative output gap (recessionary gap) • Full employment output (healthy economy, NRU 4-6%) • Positive output gap (inflationary gap) PRACTICE: 1. Draw AD/AS at full employment output: (this is when LRAS, SRAS and AD are all happy together) 2. Draw AD/AS showing a negative output gap: (this is when output is lower than it would be at full employment 3. Draw AD/AS showing a positive output gap: (this is when output is higher than it would be at full employment) 4. Define stagflation 5. Draw an AD/AS graph showing stagflation. 6. If the government steps in to address a positive or negative output gap and uses fiscal and/or monetary policy, which AD/AS curve will shift and why? 7. If the government takes no policy action to address a positive or negative output gap, which AD/AS curve will shift and why? 8. Explain how fiscal policy can be used to correct a…
please include graphs
Q: "Introducing Keynesian Economics" says that Keynes A: - wanted social revolution just like Marx - aggregrate supply is determined by the level of aggregrate demand, the level of aggregrate demand deternines level of employment - aggregrate supply determines aggregrate demand and the market always gives full-employment equilibrium - all of the above
With reference to an Injections and Withdrawals diagram. If this diagram is illustrating a Recessionary Gap. Using Macroeconomic terms explain what this diagram is outlining and what measures a Government may take to correct this economic situation, and why Government may take these actions. You may wish to include a brief analysis relating to current macroeconomic issues
hello, so ive already asked this question but i dont understant the answer that i was given. This is what I have so far: true or false: "tax cuts directed at higher income individuals will do more to stimulate the economy than those directed to lower income individuals, in the keynesian model." my reasoning with this is that its true? can you explain this to me? wouldnt the economy be stimulated more if it was given to a lower income individual because they are most likely to spend it? ANSWER I WAS GIVEN: Step 1 According to Keynes, the economy will be an unstoppable machine operating at maximum capacity if people did not save something. To allow people to spend more, Keynesians suggested tax savings. The Keynesian model, established by British economist John Maynard Keynes portraying savings as a drain on the economy and thus making deficit spending appear superior. However, unless someone keeps all of his or her savings in cash, which is unusual, savings are invested, either by…
Consider the following diagram, in which the current short-run equilibrium is at point A. At point A, the economy has If the marginal propensity to save equals 0.20, calculate the change in government spending that could eliminate the gap. S trillion. (Round your answer to two decimal places.) CO Price Level 40 120 115 111 0 LRAS 22 22.5 23 Real GDP per Year ($ trillion) SRA AD
Question 13 Include correctly labeled diagrams, if useful or required, In explaining your answers. A correctly labeled dl question prompts you to 'Calculate," you must show how you arrived at your final answer. Vander's economy is in short-run equilibrium with an inflationary gap of $360 billion, and the marginal propensity to save 0.1. the expected inflation rate is 2% and the natural rate of unemployment is 4% (b) Assume the government takes no policy action with regard to the state of Vander's economy. (i) What will happen to the actual rate of unemployment in the long run? Explain.(it) The flow will the long-run adjustment process be represented in the Phillips curve model? Explain. (c) Assume that instead of waiting for the long-run adjustment, the government of Vander is considering USA fiscal policy to addresses the inflationary gap of 360 billion(ii) How will the effect of the government's action in part (c)(i) be represented in the Phillips curve model(Ili) If the government…
5
Suppose that the government reduces the lump-sum tax, and suppose that gov- ernment always has a balanced budget: G = T. Using a diagram, describe and explain the effects of this policy on aggregate output, consumption, employment (or hours worked), and the real wage (note: show the effects on a graph with the production possibilities frontier and indifference curves).
What type of output gap occurs when the economy is below full employment? The economy is below full employment. Draw the aggregate demand curve. Label it AD. Draw a point at the equilibrium. C 140- 130- Price level (GDP price index, 2012-100) 120- 110- 100- 90- 90 80- 18.0 Potential GDP AS ☑ 18.5 19.0 19.5 20.0 20.5 21.0 21.5 22.0 Real GDP (trillions of 2012 dollars) >>> Draw only the objects specified in the question.

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