If the economy exhibited an inflationary gap, the government should follow a(n). policy, which would shift the AD curve to the and O inflationary; left; decrease unemployment. O expansionary; right; increase unemployment. inflationary; left; increase unemployment. =====
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- Price level 110 105 100 96 1 AS Ful employment. AD₂ AD₁ 50 51 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 0.75. Following Keynesian economics, the federal government can move the economy to full employment at point E₂ by: A increasing government tax revenue by approximately $33 billion. B decreasing government tax revenue by $100 billion. increasing government tax revenue by $100 billion. decreasing government tax revenue by $750 billion. decreasing government tax revenue by approximately $33 billion.does not increase output and employment but prices. O a. None of these O b. Inflationary gap O c. Deflationary gap O d. EquilibriumAn Inflationary gap is diagnosed when: O National Income Equilibrium is less than Full employment. O National Income Equilibrium is less than Full employment. National Income Equilibrium is greater than Full employment. Cannot be diagnosed by comparing national income equilibrium and Full employment levels. Moving to another question will save this response. DELL
- When the macroeconomic equilibrium is such that real GDP is less than potential real GDP, the economy is suffering from and the government policy to eliminate this gap will the price level. real GDP and to A. an inflationary gap; increase; decrease a recessionary gap; decrease; decrease OC. a recessionary gap; decrease; increase B. D. an inflationary gap; decrease; increase OE. a recessionary gap; increase; increaseSuppose 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 ratesPAE Expenditure Line PAE-500+.9Y 6000 5900 5500 5450 5000 500 45 5000 5500 6000 :Refer to the figure above. Based on the Keynesian cross diagram, short-run equilibrium output equals اختر أحد الخيارات 5000 a O 5450 b O 5500 .c O 5900 d O
- Which of the following could potentially cause a recession? O AD increases, and wages are sticky. O AD increases, and wages are flexible. O AD falls, and wages are flexible. AD decreases, and wages are sticky.During the current global pandemic, the governments of all major economies searched for policy responses to dampen the negative impacts to the economy. In general, governments are aiming to shift the AS curve to the right through large increases in government spending. increase potential GDP. O shift the AD curve to the right through large increases in government spending and tax transfers. Opush up the factor prices.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
- How is it possible for the economy to have an inflationary gap? a. GDP is falling at full employment. b. Equilibrium is at a GDP level above full employment. c. GDP is rising at full employment. d. Equilibrium is at a GDP level below full employment. e. Equilibrium is at a GDP level equal to full employment.Refer to the diagram, in which Y2 is the full-employment output. If the economy's current aggregate demand curve is AD2, it would be appropriate for the government to: SRAS P1 AD AD AD, Y Y2 Real GDP per year O reduce government expenditures or increase taxes. O reduce unemployment compensation benefits. reduce government expenditures and taxes by equal-size amounts. O increase government expenditures or reduce taxes. Price levelWhat did Keynes mean when he said that prices are sticky? OA. Prices are sticky because of cost-push inflation. OB. Prices, especially the price of labor, are inflexible downward. OC. Prices are inflexible upward due to the aversion people have to higher prices. OD. Prices need to be sticky or we would have cost-push inflation. If the prices were sticky, according to Keynes, this would then imply that the OA. long-run aggregate supply is vertical. OB. short-run aggregate demand horizontal. OC. long-run aggregate demand vertical. OD. short-run aggregate supply is horizontal.