QUESTION 20Consider an economy that is producing an aggregate output of Y2 shown in the figure below. The economy fäcescan be closed byAggregateprice levelwhichfiscal policy.LRASSRASAD2AD1ADY2 Yp Y1Real GDPOa.an inflationary gap; expansionaryO b-a recessionary gap; expansionaryOc a recessionary gap; contractionaryO d an inflationary gap; contractionary

Aggregate demand (AD): - It is the total demand of goods and services in an economy at a particular…

QUESTION 20 Consider an economy that is producing an aggregate output of Y2 shown in the figure below. The economy fäces can be closed by which fiscal policy. Aggregate price level LRAS SRAS, AD2 AD, AD Y2 Yp Y Real GDP O a. an inflationary gap; expansionary Oba recessionary gap; expansionary Oca recessionary gap; contractionary C. Od. an inflationary gap; contractionary

QUESTION 20 Consider an economy that is producing an aggregate output of Y2 shown in the figure below. The economy fäces can be closed by which fiscal policy. Aggregate price level LRAS SRAS, AD2 AD, AD Y2 Yp Y Real GDP O a. an inflationary gap; expansionary Oba recessionary gap; expansionary Oca recessionary gap; contractionary C. Od. an inflationary gap; contractionary

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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'Finance minister announces that the federal income-tax rate will rise by three percentage points." Assuming that aggregate output is demand-determined, the AE function will and equilibrium national income will O a. Become flatter; fall. O b. Shift up parallel to itself; rise. Ос. Весome steeper, rise. O d. Shift down parallel to itself; fall. O e. Not change; not change.
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- family purchasing changed when Covid and the lock-downs hit, Name some details of both quantity of purchasing and types of purchasing. - Be sure to define demand and aggregate demand and how your purchasing is part of Agg. Demand
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1. Answer any 2 from a, b, and c below a. Why does AD slope downward? b. Which is the one example that is used in the video to explain changes in C, I, G, and NX? c. Which 2 forces are different in shifting AD?
b.makes prices "sticky." O c. maximizes its volatility. O d. automatically reduces recessionary trends. QUESTION 5 An increase in taxes shifts the O a. aggregate supply curve outward. O b. consumption schedule downward. O c. aggregate demand curve outward. O d. consumption schedule upward.
An increase in taxes when the economy is above full employment OA. increases; falls B. increases; rises O C. does not change; does not change O D. decreases; falls aggregate demand and real GDP, and the price level
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In the figure at right, if the relevant aggregate demand curve is AD2, what type of gap exists and how large is it? A. inflationary gap of $500 billion B. recessionary gap of $500 billion C. recessionary gap of $1 trillion D. inflationary gap of $1 trillion
Suppose that the economy is depicted in the graph to the right. a. The equilibrium price level and real GDP in this economy are respectively OA. 80, $10 trillion. OB. $80; $10 trillion. OC. 80 trillion; 10. OD. $80 trillion; $10 trillion. b. Using the line drawing tool, show a change in aggregate demand that leads to an inflationary gap. Label this new line 'AD₁'. Carefully follow the instructions above, and only draw the required objects. to search
What would happen to output, employment, and the price level if the government increased spending on infrastructure, ceteris paribus? O Output would decrease, employment would decrease, and the price level would decrease O Output would decrease, employment would decrease, and the price level would increase O Output would decrease, employment would increase, and the price level would increase Output would increase, employment would increase, and the price level would decrease. O Output would increase, employment would increase, and the price level would increase Question 2(Multiple Choice Worth 5 points) (03.06 MC) Assume the price level is increasing, real GDP is decreasing, and the unemployment rate is increasing. Which event would explain this macroeconomic situation? OA positive supply shock OA negative supply shock A positive demand shock OA negative demand shock O insufficient data