Refer to the table below. Real Output Demanded, Original, Real Output Supplied, Billions Billions Price Level $504 108 $515 507 104 512 510 100 510 513 96 507 516 92 500 Suppose that aggregate demand increases such that the amount of real output demanded rises by $11 billion at each price level. Instructions: Enter your answers as a whole number. a. By what percentage will the price level increase? percent Will this inflation be demand-pull inflation, or will it be cost-push inflation? (Click to select) b. If potential real GDP (that is, full-employment GDP) is $510 billion, what will be the size of the positive GDP gap after the change aggregate demand? 24 billion c. If government wants to use fiscal policy to counter the resulting inflation without changing tax rates, would it increase governmer spending or decrease it? |(Click to select) ♥

Refer to the table below. Real Output Demanded, Original, Real Output Supplied, Billions Billions Price Level $504 108 $515 507 104 512 510 100 510 513 96 507 516 92 500 Suppose that aggregate demand increases such that the amount of real output demanded rises by $11 billion at each price level. Instructions: Enter your answers as a whole number. a. By what percentage will the price level increase? percent Will this inflation be demand-pull inflation, or will it be cost-push inflation? (Click to select) b. If potential real GDP (that is, full-employment GDP) is $510 billion, what will be the size of the positive GDP gap after the change aggregate demand? 24 billion c. If government wants to use fiscal policy to counter the resulting inflation without changing tax rates, would it increase governmer spending or decrease it? |(Click to select) ♥

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Chapter 12: Aggregate Demand II: Applying the IS-LM Model Question: In the IS-LM model, changes in taxes affect aggregate demand via: O a. the interest rate. O b. government spending. C. investment. Od Money supply consumption.
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please draw a graph showing the Aggregate Demand curve and Aggregate Supply curve and then show howdemand-pull and cost-push inflation can happen.
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