Other things being equal, what would happen to aggregate demand if the federal government decreased militarypurchases and state and local governments increased their road building budgets at the same time?O aggregate demand (AD) would increase, because only federal government purchases affect AD.aggregate demand (AD) would decrease, because only state and local government purchases affect AD.aggregate demand (AD) would increase if the change in federal purchases were smaller than the change instate and local purchases.O aggregate demand (AD) would decrease if the change in federal purchases was smaller than the change instate and local purchases.

Aggregate demand refers to the goods and services demanded in an economy. The five components that…

Answered: Other things being equal, what would…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The aggregate supply curve shows the relationship between the price level and the: O potential GDP in the economy. O total quantity of output that suppliers collectively produce. total quantity of output that buyers collectively plan to purchase. equilibrium GDP in the economy.
Which of the following is true? A. Potential GDP decreases as the price level increases. B. At full employment, aggregate supply is equal to potential GDP. C. The potential GDP line has a negative slope. D. Potential GDP increases as the price level increases. E. Aggregate supply is another name for potential GDP.
Equal increases in government purchases and in net taxes have equal but opposite effects on the level of real GDP demanded. a. True b. False
Answer it correctly please. I ll rate accordingly.
Instructions: Enter your answers as a whole number. B. How much does aggregate demand need to change to restore the economy to its long-run equilibrium? $ billion b. If the MPC is 0.75, how much does government purchases need to change to shift aggregate demand by the amount you found in parta? $ billion Suppose instead that the MPC is 0.6. C. How much does aggregate demand and government purchases need to change to restore the economy to its long-run equilibrium? Aggregate demand needs to change by $ billion and government purchases need to change by $1 Price Level 160 140 120 100 80 60 40 20 0 LRAS (240,90) AD₁ billion. Real GDP (billions of dollars) AS AD 80 160 240 320 400 480 560 640 720 800
Which fiscal policy will increase aggregate supply? increasing tax rates on businesses O increasing tax rates on consumers instituting more regulations on businesses allocating more money for federal student loans
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
Which of the following would cause the Aggregate Supply curve to move from AS to AS2 in the graph below? A) A general increase in energy and labor cost for businesses. B) A general decrease in labor cost for businesses. C) An increase in productivity. D) A federal government increase in spending.
If the price level and the money wage rate rise by the same percentage, what happens to the quantity of real GDP supplied? How does the economy move? If the price level and the money wage rate rise by the same percentage, the quantity of real GDP supplied _______ and there is a movement up along the _______. A. does not change; potential GDP line B. increases; aggregate supply curve C. decreases; potential GDP line D. does not change; aggregate supply curve Thanks!

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