The graph shows a hypothetical aggregate demand (AD) curve, short-run aggregate supply (SRAS) curve, and long-run aggregate supply (LRAS) curve for the U.S. economy in April 2022. PRICE LEVEL 150 130 110 YO 70 50 20 AD AS LAS 22 26 QUANTOF OUTPUT (Tries of dollars 24 24 Suppose that, in April 2022, Congress wants to bring the economy to its natural rate of output. Congress should adopt a(n). will shift the to the expansionary monetary, SRAS curve; right contractionary fiscal; AD curve; right expansionary monetary, SRAS curve; left expansionary fiscal; AD curve; left contractionary monetary SRAS curve: right policy which

The graph shows a hypothetical aggregate demand (AD) curve, short-run aggregate supply (SRAS) curve, and long-run aggregate supply (LRAS) curve for the U.S. economy in April 2022. PRICE LEVEL 150 130 110 YO 70 50 20 AD AS LAS 22 26 QUANTOF OUTPUT (Tries of dollars 24 24 Suppose that, in April 2022, Congress wants to bring the economy to its natural rate of output. Congress should adopt a(n). will shift the to the expansionary monetary, SRAS curve; right contractionary fiscal; AD curve; right expansionary monetary, SRAS curve; left expansionary fiscal; AD curve; left contractionary monetary SRAS curve: right policy which

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Refer to the diagram that shows an AD/AS model for a hypothetical economy. Suppose the economy is in a short-run equilibrium at Y₁. An appropriate fiscal policy for attaining potential output (Y*) is a(n) O A. decrease in current imports. O B. increase in personal and corporate taxes. O C. decrease in current consumption. O D. increase in exports. Po B Y₁ Real GDP AD G
“John Maynard Keynes introduced the AD-AS macroeconomic model (aggregate demand- aggregate supply) to determine the equilibrium level of real output and the level of prices in the economy” 1. Draw a diagram with aggregate demand, short-run aggregate supply, and long-run aggregate supply. 2. Discuss the reasons why the aggregate demand curve is downward sloping, while the short-run aggregate-supply curve is upward sloping?
$ Which of the following would cause the Aggregate Supply curve to move from AS to AS2 in the graph below? fs Price Level 150 140 130 120 110 100 90 80 70 60 % 5 0 16 5 O A general increase in energy and labor cost for businesses. O A federal government increase in spending. t 6 10 15 Real GDP ($ billion) -AS-AD-AS2 2 fa lyi & 7 7 J * 20 8 8 num lk ( 25 (1¹) 9
Consider the following diagram, in which the current short-run equilibrium is at point A. At point A, the economy has If the marginal propensity to save equals 0.20, calculate the change in government spending that could eliminate the gap. S trillion. (Round your answer to two decimal places.) CO Price Level 40 120 115 111 0 LRAS 22 22.5 23 Real GDP per Year ($ trillion) SRA AD
SRAS PL2 PL AD2 AD REAL GDP The Aggregate Demand Model shows an increase in Aggregate Demand or an increase in GDP. Which Fiscal Policy Action would cause this change O Raise Taxes & Cut Government Spending O Decrease Taxes & Government Spending O Increase Taxes & Government Spending O Cut Taxes and Increase Government Spending PRICE LEVEL
TOPIC: Crowding Out.
COURSE: MACROECONOMICS - IS-LM and/or MUNDELL FLEMING MODELS Refer to 2 different models (and/or conditions) under which an increase in the amount of money circulating in the economy has a NULL impact on GDP. Then, refer to 2 different models (and/or conditions) under which an increase in the amount of money circulating in the economy has a MAXIMUM impact on GDP. EXPLAIN very briefly the mechanism by which each model generates that NULL or MAXIMUM impact on GDP. Hint: 2 conditions under increase of M (money) and how impact null (zero) and maximum on GDP. Example, considering both fiscal or monetary policies or liquidity trap model. Please graph and explain on detail both cases.
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2. The aggregate demand curve is best represented by which of the following equations? AD=C+I+G + NX AD=C+I+ G - NX AD=C+I+ G AD=C+I O AD=C+I- G - NX
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on Indicate whether the following factor will affect aggregate demand (AD) or aggregate supply (AS) and whether the effect would be an increase or a decrease. Then indicate what will happen to the price level and the level of Real GDP and what type of equilibrium will result assuming that the economy is initially in long-run equilibrium. a) A decrease in the nominal wage rate. b) A decrease in exports. c) A decrease in the exchange rate. d) The discovery of vast new oil field in AD no effect decrease + increase no effect AS increase no effect increase increase decrease decrease decrease Real GDP increase decrease increase increase Equilibrium recessionary gap ⇒ inflationary gap inflationary gap inflationary gap AP ? Q Fir