K Economics in the News March 3, 2020 Read the news article, The Fed just hit the coronavirus panic button, then answer the following questions. 3. IT on March 3, ZUZU, the day or the interest rate cut, the U.S. economy is at Tull employment, what do you anticipate will be the effect of the interest rate cut? A. Aggregate demand will increase within a month. OB. The U.S. economy will avoid a coronavirus recession. OC. The inflation rate will fall and possibly become negative. OD. In two years, real GDP growth will be greater than it otherwise would have been. 4. Can interest rates be too low? OA. No. In times of crisis, the U.S. economy needs negative interest rates. OB. No. The lower the interest rate the greater is economic growth. C. Yes. The Fed needs to be able to lower rates to respond in a recession. OD. No. The lower the interest rate, the lower is the value of the U.S. dollar and the greater are U.S. exports. 5. The graph shows the short-run aggregate supply curve, the long-run aggregate supply curve, and the aggregate demand curve in the U.S. economy before the coronavirus pandemic. Draw an label three new curves to show the effect of the coronavirus pandemic if the economy moves to a below full-employment equilibrium. Draw a point at the new macroeconomic equilibrium. Price level (GDP deflator, 2012= 100) LASO 140- 130- 120- 110- 100- G SAS AD 90- 19.8 19.9 20 20.1 20.2 Real GDP (trillions of 2012 dollars)
K Economics in the News March 3, 2020 Read the news article, The Fed just hit the coronavirus panic button, then answer the following questions. 3. IT on March 3, ZUZU, the day or the interest rate cut, the U.S. economy is at Tull employment, what do you anticipate will be the effect of the interest rate cut? A. Aggregate demand will increase within a month. OB. The U.S. economy will avoid a coronavirus recession. OC. The inflation rate will fall and possibly become negative. OD. In two years, real GDP growth will be greater than it otherwise would have been. 4. Can interest rates be too low? OA. No. In times of crisis, the U.S. economy needs negative interest rates. OB. No. The lower the interest rate the greater is economic growth. C. Yes. The Fed needs to be able to lower rates to respond in a recession. OD. No. The lower the interest rate, the lower is the value of the U.S. dollar and the greater are U.S. exports. 5. The graph shows the short-run aggregate supply curve, the long-run aggregate supply curve, and the aggregate demand curve in the U.S. economy before the coronavirus pandemic. Draw an label three new curves to show the effect of the coronavirus pandemic if the economy moves to a below full-employment equilibrium. Draw a point at the new macroeconomic equilibrium. Price level (GDP deflator, 2012= 100) LASO 140- 130- 120- 110- 100- G SAS AD 90- 19.8 19.9 20 20.1 20.2 Real GDP (trillions of 2012 dollars)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:K
Economics in the News
March 3, 2020
Read the news article,
The Fed just hit the coronavirus panic button, then answer the following questions.
3. IT on March 3, ZUZU, the day or the interest rate cut, the U.S. economy is at Tull employment, what do you
anticipate will be the effect of the interest rate cut?
A. Aggregate demand will increase within a month.
OB. The U.S. economy will avoid a coronavirus recession.
OC. The inflation rate will fall and possibly become negative.
OD. In two years, real GDP growth will be greater than it otherwise would have been.
4. Can interest rates be too low?
OA. No. In times of crisis, the U.S. economy needs negative interest rates.
OB. No. The lower the interest rate the greater is economic growth.
C. Yes. The Fed needs to be able to lower rates to respond in a recession.
OD. No. The lower the interest rate, the lower is the value of the U.S. dollar and the greater are U.S. exports.
5. The graph shows the short-run aggregate supply curve, the long-run aggregate supply curve, and the aggregate
demand curve in the U.S. economy before the coronavirus pandemic.
Draw an label three new curves to show the effect of the coronavirus pandemic if the economy moves to a
below full-employment equilibrium. Draw a point at the new macroeconomic equilibrium.
Price level (GDP deflator, 2012= 100)
LASO
140-
130-
120-
110-
100-
G
SAS
AD
90-
19.8
19.9
20
20.1
20.2
Real GDP (trillions of 2012 dollars)
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