QUESTION 16 2 policies are applied. The overall outcome is a lower interest rate and no change in output. Which 2 policies are applied? (select two answers) Monetary expansion O Monetary Contraction O Fiscal Expansion Fiscal Contraction 00O0
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- (in trillions) anupuedgejetoally $35 $30 $25 $20 $15 $10 $5 $5 $10 $15 $20 $25 45° Line AE $30 $35 Real GDP (in trillions) The central bank has recently conducted monetary policy that substantially reduces the real interest rate. As a result, autonomous spending increases by $5 trillion. Examine the effects of this reduction in the real interest rate by identifying (1) the amount of autonomous spending before the real interest rate falls, (2) the amount of induced spending before the real interest rate falls, (3) the level of equilibrium Real GDP before the real interest rate falls, (4) the value of the spending multiplier, (5) the level of equilibrium Real GDP after the real interest rate falls, and (6) the amount of induced spending after the real interest rate falls.28 During the Great Depression the US government believed that deflation was caused by a collapse in the prices of stock and other assets, reducing the levels of wealth and confidence. The diagrams show two approaches to counter deflation. diagram Y diagram Z price level price level AS, „AS2 P2 AS P, P2 P, `AD, `AD, AD, real GDP real GDP Given this belief, which policy should the US government have used, in an attempt to remove the deflation and which diagram represents the intended outcome of the policy? policy intended outcome A decrease interest rates diagram Y B reduce corporation tax diagram Z increase interest rates diagram Z D reduce corporation tax diagram Y8. Draw the macroeconomy in equilibrium (snowflake). What happens when aggregate demand increases? Show on graph. Label new short run equilibrium E2. What state is this economy in? a) Give an example of something that could have caused this. b) What happens to GDP and price level? c) In this scenario, what do we call the difference between actual GDP and potential GDP? d) What is the unemployment rate relative to the natural rate? e) How would the economy fix itself? This means market adjustments, not government intervention. Show on graph. Label new equilibrium E3. Briefly explain. US 1 1:3
- Sub : EconomicsPls answer very fast.I ll upvote. Thank Youplease helppppp01 10 CO xp 381 In the figure, the economy is at an equilibrium with real GDP of $20 trillion and a price level of 110. As the economy moves toward its ultimate equilibrium, the curve shifts, because 0 0 0 0 0 A. aggregate demand; leftward; the money wage rate rises B. aggregate supply: rightward; the money wage rate falls OC. potential GDP; leftward; the money wage rate falls D. aggregate demand; rightward; the money wage rate falls OE. aggregate supply; leftward; the money wage rate rises 130- 120- 110- 100- Price level (GDP price Index, 2012 = 100) Potential GDP 90- AS AD 19.0 19.5 20.0 20.5 21.0 21.5 22.0 Real GDP (trillions of 2012 dollars) ✓ ✓ 5
- 5 Which of the following is not a reason for the increase in aggregate demand? a. Decrease in imports b. Increase in government expenditure c. Increase in consumption d. None of the options Clear my choice5.Question 39 Suppose that the economy faces an inflationary GDP gap. Which of the following policies would be appropriate to close the gap? Fed can raise the price of the bond to sell more bonds to the consumers. O Fed can lower the price of the bond to sell more bonds to the consumers. Fed can raise the price of the bond to buy more bonds from the consumers. Fed can lower the price of the bond to buy more bonds from the consumers.
- Consider a different economy currently in recession. If the government wants to change its spending to cause a $10,000 increase in output Y and people in the economy spend 95 percent of each additional dollar they get, how much must G change? Carefully follow all numeric directions. Use a negative number (with negative sign) to depict an increase in G and a positive number (no sign) to depict a decrease.9. Money Supply Suppose an economy is in long-run equilibrium. The central bank raises the money supply by 5 percent. Use your diagram to show what happens to output and the price level as the economy moves from the initial to the new short-run equilibrium. RANDO LHAS Aggregale Supply * A Demand Quantity of Oulpul Now adjust the graph to show the new long-run equilibrium. Aggregate and - Aggregate Supply What causes the economy to move from its short-run equilibrium to its long-run equilibrium? The government increases taxes to curb aggregate demand. The government increases spending to increase aggregate demand. O Nominal wages, prices, and perceptions adjust downward to this new price level. O Nominal wages, prices, and perceptions adjust upward to this new price level. Which of the following is true according to the sticky-wage theory of aggregate supply as a result of the increase in the money supply? Check all that apply. Nominal wages at the initial equilibrium are equal to…Question Now we introduce banks that will act as liquidity providers in the economy. Suppose that banks are able to issue private IOU's, such that individuals deposit goods with the bank and the bank can promise a return on the deposit. We start by assuming that there is no reserve requirement or lending by the Central Bank. (a) Suppose a young individual wants to use one consumption good to acquire money. What return does the bank need to promise the individual to have them deposit the good with the bank instead? (b) Suppose that when the individual deposits a good with the bank, the bank uses this good to create capital. Further, suppose that when the bank offers a return on deposits that is equal to the real rate of return on money then the individual will choose to deposit with the bank instead of acquiring money. A young individual in period t deposits one good with the bank when young. Suppose no young individuals in period t+1 make deposits. How does the bank pay the young…