From the following graph, identify the initial equilibrium, the short-run equilibrium, and the long-run equilibrium based on the scenarios below. Explain your answers and identify what happened to the price level and aggregate output. Scenario 4. The economy is initially in long-run equilibrium at point C, and energy prices decrease significantly. The government reacts by implementing a contractionary fiscal policy. JAS (Long run) AS, (Short run) |AS; (Short run) B AD AD2 Yo Y2 Aggregate output (income), Y Price kevel, P

From the following graph, identify the initial equilibrium, the short-run equilibrium, and the long-run equilibrium based on the scenarios below. Explain your answers and identify what happened to the price level and aggregate output. Scenario 4. The economy is initially in long-run equilibrium at point C, and energy prices decrease significantly. The government reacts by implementing a contractionary fiscal policy. JAS (Long run) AS, (Short run) |AS; (Short run) B AD AD2 Yo Y2 Aggregate output (income), Y Price kevel, P

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Price Level p* a LRAS Y* AD Real GDP AS Tools Fiscal Action 0 a. How does the short-run equilibrium compare to the initial equilibrium? The price level has (Click to select) and output has [(Click to select) b. What is the primary concern of policy makers under these conditions? high unemployment O declining value of the dollar O high Inflation V c. What policy action might the government take in order to improve economic conditions? (Click to select) fiscal policy by [(Click to select) taxes and/or (Click to select)government purchases d. Use the graph above to depict the goal of the fiscal action discussed Instructions: Use the tool provided 'Fiscal Action' to show the result of the policy action taken by the government. Plot only the endpoints of the line (2 points total). Label your line appropriately. e. What is the desired final outcome after the fiscal policy action and multiplier effect have occurred? A price level [(Click to select) P* and an output level [(Click to select) Y*…
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Consider the economy represented by the aggregate demand aggregate supply (AD-AS) graph shown, where output is below full employment output (Y*) and unemployment is above the natural rate. To move out of a recession, the government should decrease taxes and increase government spending. increase taxes and decrease government spending. O decrease taxes and government spending. increase taxes and government spending. Adjust the graph to reflect the result of this policy action. Price level (P) Real GDP (Y) LRAS AD SRAS
Dear Expert, the question that is provided as an image is one question. If there the questions necessitate you to interact with the graph, kindly make your work clear and apparent as to how I should accordingly interact with it. I have provided all options you would expect to see in the form of an annotation. Several tutors have been answering these questions wrongly so kindly consider all aspects of the question. Thank you.
? G The following graph shows a hypothetical economy in long-run equilibrium at an expected price level of 120 and a natural output level of $600 billion. Suppose the government increases spending on building and repairing highways, bridges, and ports. Using the graph, shift the short-run aggregate supply (AS) curve or the aggregate demand (AD) curve to show the short-run impact of the increase in government spending. PRICE LEVEL 240 200 AS 160 120 80 40 0 0 200 400 600 AD 800 1000 1200 OUTPUT (Billions of dollars) ŏ AD 一 AS (?) In the short run, the increase in government spending on infrastructure causes the price level to the quantity of output to the price level people expected and the natural level of output. The increase in government spending will cause the unemployment rate to the natural rate of unemployment in the short run. Again, the following graph shows a hypothetical economy experiencing long-run equilibrium at the expected price level of 120 and natural output level of…
Aggregate Supply and Aggregate Demand show the relationship between economic output (GDP) and price levels in the macro-economy at a given point in time. Define the terms ‘Aggregate Demand’ and ‘Aggregate Supply.’ State TWO (2) monetary and TWO (2) fiscal policies that government can adopt, to effect change in Aggregate Demand.
Assume that a hypothetical economy with an MPC of 0.75 is experiencing severe recession. Instructions: In part a, round your answers to 2 decimal places. Enter positive numbers. In part b, enter your answers as whole numbers. a. By how much would government spending have to rise to shift the aggregate demand curve rightward by $40 billion? $ billion. How large a tax cut would be needed to achieve the same increase in aggregate demand? $ billion. b. Determine one possible combination of government spending increases and tax increases that would accomplish the same goal without changing the amount of outstanding debt (because it maintains a balanced budget, G = T). Increase spending by $ billion. Increase taxes by $ billion.
Assume the Canadian economy is currently at equilibrium. a. Using a correctly labeled aggregate demand and supply graph, show Full employment output (yf) Current price level (PL1) b. World War III breaks out and Canada has to get involved. The Prime Minister chooses to increase the military budget by 40%. On your graph from part A, show what will happen in the economy, labeling the new equilibrium as Q2, PL2. c. Using a correctly labeled graph of the loanable funds market, show how the Prime Minister’s decision will affect the economy.
Please answer everything in the photos including the graph.
4 Exhibit 11-2 Aggregate demand and supply model 110 Price level 105 (CPI) 100 95 E NE Full employment. AS AD₁ AD 5.0 5.1 Real GDP (trillions of dollars per year) Suppose the economy in Exhibit 11-2 is in equilibrium at point E, and the marginal propensity to consume (MPC) is 0.9. Following Keynesian economics, the federal government can move the economy to full employment at point E₂ by increasing government spending by $_____ billion.
Exhibit 24-1 shows the short run and long run equilibrium in an aggregate demand-aggregate supply model. If the economy is initially at point G which of the following changes will most likely be observed when a contractionary fiscal policy is adopted? a) The SRAS curve will shift to the left b) Real GDP will increase above Y2 c)The aggregate demand curve will shift from AD** to AD d)The LRAS curve will shift to the right