Problem Solving-Government Purchases Exercise 2 (Algo) The graph below depicts an economy where an increase in aggregate demand has caused inflation. Assume the government decides to conduct fiscal policy by decreasing government purchases to restore full-employment GDP. Price Level 180 160 140 $ 120 100 80 An Real GDP (billions of dollars) 100 200 300 400 500 600 700 800 900 1000 0 billion Fiscal Policy LRAS billion AS AD < Prev 43.gif AD₁ 8 of 10 Next > Instructions: Enter your answer as a whole number. If you are entering a negative number include a minus sign a. How much does aggregate demand need to change to restore the economy to its long-run equilibrium? thisissparta.swf.mp3 Price Level 014342050574b1.jpg 160 AS LRAS b. If the MPC is 0.8, how much does government purchases need to change to shift aggregate demand by the amount you found in part a? 180 Suppose instead that the MPC is 0.5. c. How much does aggregate demand and government purchases need to change to restore the economy to its long-run equilibrium? billion and government purchases need to change by $ Aggregate demand needs to change by $ billion

Problem Solving-Government Purchases Exercise 2 (Algo) The graph below depicts an economy where an increase in aggregate demand has caused inflation. Assume the government decides to conduct fiscal policy by decreasing government purchases to restore full-employment GDP. Price Level 180 160 140 $ 120 100 80 An Real GDP (billions of dollars) 100 200 300 400 500 600 700 800 900 1000 0 billion Fiscal Policy LRAS billion AS AD < Prev 43.gif AD₁ 8 of 10 Next > Instructions: Enter your answer as a whole number. If you are entering a negative number include a minus sign a. How much does aggregate demand need to change to restore the economy to its long-run equilibrium? thisissparta.swf.mp3 Price Level 014342050574b1.jpg 160 AS LRAS b. If the MPC is 0.8, how much does government purchases need to change to shift aggregate demand by the amount you found in part a? 180 Suppose instead that the MPC is 0.5. c. How much does aggregate demand and government purchases need to change to restore the economy to its long-run equilibrium? billion and government purchases need to change by $ Aggregate demand needs to change by $ billion

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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(c) In a city, the consumer price index in 2015, 2016, and 2017 were 100, 108.5, and 113.5 respectively. Find the percentage change of price from 2016 to 2017.
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At a price of $14, country 1 will (a) offer for export 9 units of this product. (b) seek to import 9 units of this product. (c) choose not to trade. (d) increase supply. (e) offer for export 18 units of this product
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Consider the following 10 items stored in stocks. Item Demand Unit Cost A2 3000 50 B8 4000 12 C7 1500 45 D1 6000 10 E9 1000 20 F3 500 500 G2 300 1500 H2 600 20 15 1750 10 J8 2500 (a) Develop an ABC classification. (b) Explain how this classification helps decision maker. (c) The decision maker wants to put item A2 into category A. Discuss the reasoning behind this decision.
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