Does it appear that the economy has strengthened or weakened over the past year?The market interest rate increased by 2.0%, and the amount of capital borrowedWhich of the following factors could be responsible for the change in demand shown in the graph?O New technological advances opened up more production opportunities for businesses.O Households began saving a greater percentage of their income.The Federal Reserve (the Fed) decided to relax its monetary policy and expanded the money supply.Expected inflation decreased.O WeakenedStrengthened.8.05%byIf the inflation rate was 2.00% and the nominal interest rate was 9.00% over the last year, what was the real rate of interest over the last year?Disregard cross-product terms; that is, if averaging is required, use the arithmetic average.8.75%billion.5.95%O 7.00% 5. Themarket for capitalThe following graph shows the supply of and demand for capital in a market over the last year. You can see that the demand for capital has increasedover the last year (the demand curve shifted to the right).INTEREST RATE, r (Percent)201816141222D1D22468 10 12 14 16QUANTITY OF MONEY (Belions of dollars)Supply18 20?

Demand is defined as the desired back by willingness and ability to pay by an individual.It depends…

Does it appear that the economy has strengthened or weakened over the past year? Weakened Strengthened The market interest rate increased by 2.0%, and the amount of capital borrowed Which of the following factors could be responsible for the change in demand shown in the graph? O New technological advances opened up more production opportunities for businesses. O Households began saving a greater percentage of their income. The Federal Reserve (the Fed) decided to relax its monetary policy and expanded the money supply. Expected inflation decreased. O 8.05% If the inflation rate was 2.00% and the nominal interest rate was 9.00% over the last year, what was the real rate of interest over the last year? Disregard cross-product terms; that is, if averaging is required, use the arithmetic average. 8.75% by 5.95% billion. O 7.00%

Does it appear that the economy has strengthened or weakened over the past year? Weakened Strengthened The market interest rate increased by 2.0%, and the amount of capital borrowed Which of the following factors could be responsible for the change in demand shown in the graph? O New technological advances opened up more production opportunities for businesses. O Households began saving a greater percentage of their income. The Federal Reserve (the Fed) decided to relax its monetary policy and expanded the money supply. Expected inflation decreased. O 8.05% If the inflation rate was 2.00% and the nominal interest rate was 9.00% over the last year, what was the real rate of interest over the last year? Disregard cross-product terms; that is, if averaging is required, use the arithmetic average. 8.75% by 5.95% billion. O 7.00%

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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01 10 CO xp 381 In the figure, the economy is at an equilibrium with real GDP of $20 trillion and a price level of 110. As the economy moves toward its ultimate equilibrium, the curve shifts, because 0 0 0 0 0 A. aggregate demand; leftward; the money wage rate rises B. aggregate supply: rightward; the money wage rate falls OC. potential GDP; leftward; the money wage rate falls D. aggregate demand; rightward; the money wage rate falls OE. aggregate supply; leftward; the money wage rate rises 130- 120- 110- 100- Price level (GDP price Index, 2012 = 100) Potential GDP 90- AS AD 19.0 19.5 20.0 20.5 21.0 21.5 22.0 Real GDP (trillions of 2012 dollars) ✓ ✓ 5
Real wage X Figure 5: The supply side of the economy Output WS PS Consider Figure 5, which represents the supply side of the economy. Which point on the diagram, matches this description of what is happening: Real wages are on a rising trend
1. In the following table, determine how each event likely effects potential output (a.k.a., long-run aggregate supply). Direction of Potential Output Shift Event Left Right No Shift The government allows more immigration of working-age adults. For environmental and safety reasons, the government requires that the country’s nuclear power plants be permanently shut down. An investment tax credit increases the rate at which firms acquire machinery and equipment. 2. In the following table, determine how each event affects the position of the aggregate demand curve. Direction of AD Curve Shift Event Left Right No Shift A decrease in consumer confidence (suggests people believe a contraction/recession coming) A decrease in individual income tax rates An increase in the value/price of housing 3. What effect would an increase in aggregate demand…
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According to the interest rate effect, when the price falls, the interest rate Orises and the quantity of real GDP demanded increases. is not affected. Orises and the quantity of real GDP demanded decreases. Ofalls and the quantity of real GDP demanded increases.
33. Refer to Figure 4. As the_____decreases, the amount of ____demanded by all sectors of the economy_____
The graph shows an economy's aggregate demand and aggregate supply curves and potential GDP. Does this economy have an inflationary gap or a recessionary gap? How does this economy return to full employment? This economy has _______ gap. It returns to full employment as _______. A. an inflationary; the money wage rate rises B. a recessionary; potential GDP increases C. a recessionary; the money wage rate falls D. an inflationary; aggregate demand decreases
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
At the macroeconomic equilibrium, the economy has _______ gap, so to return to full employment _________. A. an inflationary; the money wage rate rises and aggregate supply increases B. a recessionary; the money wage rate falls and aggregate supply increases C. an inflationary; the money wage rate rises and aggregate supply decreases D. a recessionary; the money wage rate rises and aggregate supply decreases
28. Which of the following are determinants of aggregate demand? Choose all that apply. A. a spike in net exports B. the Federal Reserve lowering its interest rates C. a change in technology D. growing consumer confidence
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