QUESTION 38 48 44 40 36 32 28 24 20 16 12 8 4 0 E,Q I 0 8 16 24 32 40 AE2 AE1 Q 38. Which of the following could have caused a shift of the Aggregate Expenditures curve from AE1 to AE2? O a) an increase in the price level b) an increase in the rate of interest c) an increase in government purchases of goods and services d) a contractionary monetary policy

QUESTION 38 48 44 40 36 32 28 24 20 16 12 8 4 0 E,Q I 0 8 16 24 32 40 AE2 AE1 Q 38. Which of the following could have caused a shift of the Aggregate Expenditures curve from AE1 to AE2? O a) an increase in the price level b) an increase in the rate of interest c) an increase in government purchases of goods and services d) a contractionary monetary policy

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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6. Keynesian demand-side versus supply-side effects Consider an economy operating below its full-employment output level. The government wants to enact a reduction in income taxes in an effort to restore the economy to full-employment output. On the graph that follows, shift one of the curves to illustrate the impact of the income tax cut on aggregate supply (AS) and aggregate demand (AD) that is emphasized by Keynesian economists. Note: Select and drag one or both of the curves to the desired position. Curves will snap into position, so if you try to move a curve and it snaps back to its original position, just drag it a little farther. PRICE LEVEL REAL GDP (Billions of dollars) SRAS AD AD SRAS
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1. Suppose the economy has fallen into a recession (output level ?0), and the federal government wants to return the economy to its original level of output (?). Respond to each of the following questions using appropriate diagrams and explanations.(a) If policy makers can only use fiscal tools, what should they do?(b) If policy makers can only use monetary tools, what should they do? (c) What should they do if they want to return output to its original level but keep investment from changing?
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Refer to the information provided in Figure 15.1 below to answer the questions that follow. M 5 A) recognition lag. C) implementation lag. 4 12 13 4 15 16 17 18 Time Figure 15.1 22) Refer to Figure 15.1. If the economy is actually at Point C but policy makers think that it is still at 22) Point B, this is an example of B) response lag. D) economic policies ineffectiveness.
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28. Assuming Aggregate Demand and Aggregate Supply are initially at ADo and ASo, and AD1 and AS1 represent changes, which of the above graphs depict the economy's self-correcting mechanism at work? a) Figures A & B b) Figures A & C c) Figures C & D d) Figures B & D
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Suppose that the dynamic aggregate demand curve in Swaziland is determined by the equation M + U-6%. Using this information, draw Swaziland's dynamic aggregate demand curve on the graph. 14 13 12 Aggregate deman 10 8 5 4 3 2 -4 -3 2 1 0 1 2 3 45 678 9 10 Real GDP growth rate
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