The following graph shows aggregate demand (AD) and aggregate supply (AS) curves for a hypothetical economy.PRICE LEVEL (CPI)1401351301251201151101051009590200 220240ASAD260 280 300 320 340REAL GDP (Billions of dollars)360 380 400AD₂New Macro Eq?Suppose the full employment output level in this economy is $300 billion. In order to move the economy to full-employment output at the lowestpossible price level, the aggregate demand curve must shift to thebyat each price level. Use the green line (triangle symbols) to show the shift in aggregate demand necessary to return the economy to full employment. Then use the purpledrop lines (diamond symbol) to show the macroeconomic equilibrium at full-employment output. Be sure the new aggregate demand curve (AD2) isparallel to AD₁. You can click on AD₁ to see its slope.Suppose the government in this economy wants to enact fiscal policies that will shift the aggregate demand curve in the direction and magnitude youindicated. The marginal propensity to consume (MPC) in this economy is 0.5. This implies a spending multiplier of and a tax multiplier ofConsider each fiscal policy listed here. Which policies would shift the aggregate demand curve in a way that restores full-employment output at thelowest possible price level? Check all that apply.00000Increase government expenditures by $40 billionIncrease government expenditures by $80 billion and raise taxes by $80 billionIncrease government expenditures by $60 billion and raise taxes by $40 billionIncrease taxes by $80 billionDecrease taxes by $100 billion and decrease government expenditures by $20 billion

Full employment is the condition where all people who are available and searching for work can find…

The following graph shows aggregate demand (AD) and aggregate supply (AS) curves for a hypothetical economy. PRICE LEVEL (CPI) 140 135 130 125 120 115 110 105 100 95 90 200 220 240 AS AD 260 280 300 320 340 REAL GDP (Billions of dollars) 360 380 400 AD 2 New Macro Eq ? Suppose the full employment output level in this economy is $300 billion. In order to move the economy to full-employment output at the lowest possible price level, the aggregate demand curve must shift to the by at each price level.

The following graph shows aggregate demand (AD) and aggregate supply (AS) curves for a hypothetical economy. PRICE LEVEL (CPI) 140 135 130 125 120 115 110 105 100 95 90 200 220 240 AS AD 260 280 300 320 340 REAL GDP (Billions of dollars) 360 380 400 AD 2 New Macro Eq ? Suppose the full employment output level in this economy is $300 billion. In order to move the economy to full-employment output at the lowest possible price level, the aggregate demand curve must shift to the by at each price level.

Survey of Economics (MindTap Course List)

9th Edition

ISBN:9781305260948

Author:Irvin B. Tucker

Publisher:Irvin B. Tucker

Chapter14: Aggregate Demand And Supply

Section14.A: Cost-push And Demand-pull Inflation Revisited

Problem 6SQP

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