The accompanying diagram shows the current macro-economic situation for the economy of Albernia. Youhave been hired as an economic consultant to help theeconomy move to potential output, Yp.AggregatepricelevelLRASSRASP1E1AD1Real GDPYp- Potentialoutputa. Is Albernia facing a recessionary or inflationary gap?b. Which type of fiscal policy-expansionary orcontractionary-would move the economy ofAlbernia to potential output, Yp? What are someexamples of such policies?c. Illustrate the macroeconomic situation in Alberniawith a diagram after the successful fiscal policy hasbeen implemented.

a. Potential output : Yp Actual output : Y1 In the given diagram, actual output is lower than the…

The accompanying diagram shows the current macro- economic situation for the economy of Albernia. You have been hired as an economic consultant to help the economy move to potential output, Yp. Aggregate price level LRAS SRAS P1 E1 AD1 Real GDP Yp- Potential output Y1 Is Albernia facing a recessionary or inflationary gapa Which type of fiscal policy-expansionary or contractionary-would move the economy of Albernia to potential output, Yp? What are some examples of such policies? llustrate the macroeconomic situation in Albernia with a diagram after the successful fiscal policy ha een implemented ....

The accompanying diagram shows the current macro- economic situation for the economy of Albernia. You have been hired as an economic consultant to help the economy move to potential output, Yp. Aggregate price level LRAS SRAS P1 E1 AD1 Real GDP Yp- Potential output Y1 Is Albernia facing a recessionary or inflationary gapa Which type of fiscal policy-expansionary or contractionary-would move the economy of Albernia to potential output, Yp? What are some examples of such policies? llustrate the macroeconomic situation in Albernia with a diagram after the successful fiscal policy ha een implemented ....

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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can you tell me which questions i've gotten wrong? This is a practice quiz that doesnt tell you the correct answers at the end. thanks 1- An increase in business investment spending has the same effect on the level of ad as an increase in the same amount of government spending. -true 2- If the government increased taxes by $10 at the same time it increased spending by $10 there would be no effect on the level of AD. 3- If social security payments to retirees increase, AD will increase and raise Y*. -true 4- Tax cuts in the classical range of the AS will stimulate output and unemployment -false 5- Increasing welfare payments by borrowing money to do so will increase AD- true 6- if the mpc increases, the multiplier decreases- false 7- if the mps increases the multiplier decreases -true 8- part of the cost of growing government budget deficits is and “opportunity cost” of what else could have been done with the money, particularly if the borrowing is used to increase consumption spending.…
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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 Aggregate price level which fiscal policy. LRAS SRAS AD2 AD1 AD Y2 Yp Y1 Real GDP Oa. an inflationary gap; expansionary O b-a recessionary gap; expansionary Oc a recessionary gap; contractionary O d an inflationary gap; contractionary
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22.
What is meant by the term crowding out? In your answer also explain the implications of crowding out for the macroeconomy
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