Q: Using the AD-AS model, show the effects of an increase in government spending assuming the economy…
A: AS-AD model is a way of illustrating national income with respect to changes in price level. AD-AS…
Q: In the graph below, an increase in aggregate demands leads the economy to move from point P AS' in…
A: Aggregate demand:Aggregate Demand is when the total number of consumers have the desire to buy…
Q: What is the difference betw een the Keynesian model and the classical model when it comes to…
A: The Classical Model suggests that the economy is always at the full employment level of output,…
Q: what two soluation did keynes suggest as appropriate polices in order to close a reccessnary gap ?
A: A recessionary gap refers to the difference between actual and potential production in an economy,…
Q: According to the Keynesian model, which of the following would NOT increase aggregate demand?…
A: Answer :- option b - a decrease in the number of employees in government agencies.
Q: Aggregate Demand is the prime mover of the economy." This statement was made by a: A. Classcal…
A: Aggregate demand is the sum of Consumption, Investment, government spending and net export. So, AD…
Q: The aggregate demand curve slopes downward because when the price level is lower, people can afford…
A: The aggregate demand curve slope downwards as the price level and the aggregate demand has a…
Q: Consider the AD/AS model. In the long run, after factor prices have fully adjusted to any output…
A: GDP is the total values of all final goods and services provided by a nation during particular…
Q: The classical aggregate demand curve is horizontal which indicates that the same amount of goods…
A: The Classical Aggregate Demand Curve is downward sloping which shows price on the Y-axis and the…
Q: What did Keynes mean when he said that prices are sticky? OA. Prices are sticky because of cost-push…
A: Regarding the first question, Keynes referred to prices as "sticky" to describe their resistance to…
Q: Owing to the global rise of fertilizer prices in 2022 (in turn caused by the Russian invasion of…
A: The total amount of goods and services that all consumers in the economy are requesting is referred…
Q: When consumers’ expected income decreases, this leads to A. Positive shift (increase) in AD B.…
A: Expected income of consumers and aggregate demand AD have positive relationship.
Q: Use the following graph to answer the next question. AS, Price Level CF E Multiple Choice AS O A B C…
A: Aggregate demand (AD) is the total quantity of goods and services that all individuals, businesses,…
Q: The figure below is a part of the AD-AS model as a description of the current situation of an…
A: Part (a): Find the short-run equilibrium The short-run equilibrium occurs at the intersection of the…
Q: Money demand and money supply determine the rate of interest in the Keynesian model. O True O False
A: Ok an economy money demand is made by the people of a country to make economic transactions and…
Q: Assume an economy is initially operating at the natural rate of output. a. Draw an AD-AS model.…
A: At different price levels, the aggregate demand curve depicts the total quantity of all commodities…
Q: * Q₁ Real Output Refer to the diagram. Assume both upward and downward price and wage flexibility in…
A: Aggregate demand is the finished goods and services total demand that is produced in the economy. It…
Q: supply creates its own demand.
A: Answer Classical economists believe that the market is usually straightforward due to the value…
Q: Based on the neoclassical economics, when AD, aggregate demand goes down, in the long run, there…
A: In neoclassical economics, the long-run adjustment to a decrease in aggregate demand (AD) is…
Q: Structural unemployment will have what effect in our AD/AS model? shift AS to the left. have no…
A: Unemployment is the the situation when the person is searching for work but is not able to get a…
Q: When the economy is experiencing a recession, why would aneoclassical e conomist be…
A: Recession is a situation in an economy which can not be controlled or stopped. It is a part of…
Q: las 140 120- 1004 LRAS SRAS
A: The graph above shows the short run aggregate and long run aggregate supply curve. when hurricane…
Q: uppose the government sharply increases the minimum wage, raising the income of many workers.…
A: AD and AS model determines the output and price level in the economy. when AD=AS the economy…
Q: Economist who generally empgasize the importance of aggregate supply in determining the size of the…
A: Aggregate Supply refers to the total quantity of output that all the firms in the economy will…
Q: Which assumption is the Keynesian model based on? O people can afford a high level of government…
A: AS-AD model: In this model we are given the aggregate demand curve which exhibits negative…
Q: In the Keynesian framework, for each of the following events which might cause a recession and/or…
A: Note:- Since we can only answer up to three subparts, we'll answer the first three please repost the…
Q: If potential GDP increases, what happens to aggregate supply? Does the LAS curve shift or is there a…
A: Long run aggregate supply is vertical at potential GDP, that is at full employment.
Q: Consider the following graph. The economy is currently at point D. Which point will the economy go…
A: Macroeconomic analysis provides a thorough picture of an economy's financial situation. It detects…
Q: Which of the following will NOT shift the AD curve? Oa. O a. Changes in consumer confidence O b.…
A: Aggregate demand curve is a downward sloping curve which represents a total demand of final goods…
Q: Consider the AD/AS macro model. A permanent demand shock that causes equilibrium output to rise…
A: Aggregate demand (AD) refers to the total quantity of goods and services that all sectors of an…
Q: Aggregate price level LRAS SRAS,
A: An economy is an enormous arrangement of related production and utilization exercises that guide it…
Q: Suppose that government reduces business regulations. Which of these occurs in the AD&AS Model? O…
A: Aggregate demand is the total expenditure incurred by all the sectors of the economy during a given…
Q: Countries like China and other developed economies are in the Neo dassical zone. What is the best…
A: Neo-classical zone: In the neo-classical zone either the aggregate demand shifts to the right or…
Q: Assume that an economy is initially operating at the natural rate of output (full employment…
A: Aggregate demand (AD) is the sum total amount of commodities and services demanded in an economy at…
Q: What is the Keynesian prescription for recession? For inflation?
A: Before the 1930s’ great depression in the world, the classical economists were prevalent in the…
Q: llustrate how the following would affect the economy equilibrium output using well labelled Keynesi…
A: Goods market is in equilibrium when Aggregate demand and aggregate supply are equal at certain…
Q: Supply side economics says we should talk about "the economy" because can't explain incentives to…
A: The above question is about "Reaganomics" and the term Reaganomics states the economic policies of…
Q: Name some factors that could cause AD to shift, and say whether they would shift AD to the right or…
A: Aggregate demand refers to the average amount of goods or services demanded in the economy by the…
Q: Do you believe that the Hayek’s classical AD-AS model explain the factors that cause changes…
A: 1.2 The Hayek’s classical model illustrates the aggregate supply curve as a vertical straight line…
Q: When a supply-side shock is assumed to be temporary: O the LRAS curve shifts. O neither the LRAS…
A: Since you have asked for multiple questions, we have answered the first one for you. If you want the…
Q: Which of the following is incorrect about the Keynesian model shown below? Price Level Ро AD₁ E₁ Y₁…
A: The Keynesian model shows the relationship between AD and AS and shows various price levels on the…
Step by step
Solved in 2 steps
- Comparing ModelsWhat are the differences between our Keynesian Cross and the Macro Equilibrium (AS and AD) diagram? Which model has more to offer?Assume a Keynesian AS curve. In the short run, when there is a large negative output gap (AD-AS intersection to the left of the full employment level of output), then O the government should use contractionary demand management policy expansionary demand management policy is likely to be highly inflationary O expansionary demand management policy does not cause much inflation contractionary demand management policy is likely to be highly inflationaryDraw and properly label an AD-AS model to show Keynesian, intermediate, and neoclassical zones. Then, briefly explain the levels of unemployment, inflation and real GDP in each zone, and also confirm whether all three goals of a macro economy are being achieved in each zone. 2. Draw and properly label the AD-AS graphs or one AD-AS graph to show recessionary and inflationary gaps. Then, discuss in detail how Keynesians suggest that recessionary and inflationary gaps be closed. 3. Draw and properly label AD-AS graphs or one AD-AS graph to show recessionary and inflationary gaps. Then, discuss in detail how neoclassicals suggest that recessionary and inflationary gaps be closed.
- In the Keynesian framework, which of the following events might cause a recession/inflation. Explain using the aggregate demand/aggregate supply. I only need the type of examples that go with the question though (Examples are crucial please!)  d. The interest rate rises e. The good imported from a major trading partner becomes much less expensive 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 LEVELCan someone please answer both questions asap?In a basic Keynesian macroeconomic model, if Effective demand is greater than the output then A. ED > Y(I > S) - V (decrease) Y (increase) B. ED > Y(I > S) - V (increase) Y (decrease) C. ED < Y(I < S) - V (decrease) Y (increase) D. ED < Y(I < S) - V (increase) Y (decrease) Question 2 What would happen in the market for loanable funds if the government were to decrease the tax rate on interest income? A. The supply of and demand for loanable funds would shift right. B. The supply of and demand for loanable funds would shift left. C. The supply of loanable funds would shift right and the demand for loanable funds would shift left. D. None of the above is correct.
- If a Keynesian model shows that aggregate demand for both goods and labor has shifted to the left, while wages are sticky and remain at the same level and prices remain at the same prices, what will be the result in the labor market? a a shortage of labor b depression c coordinated wage reductions d a surplus of laborWhat would a Keynesian likely recommend in response to a recession?I is economy IS In a recessIonary yap wrieı ure aciuai GUP IS Delow pouu DIIIIUI. b. Explain why wages rise when output is greater than potential but fall when output is less than potential. When there is a recessionary gap, if there is no intervention in the economy the level of actual unemployment will rise above the natural level of unemployment in the economy. Thus, there will be more competition among workers to find a job, which will put downward pressure on the level of wages. 1- c. For each situation, fill in the table by identifying whether the AS curve shifts up, down, or is stationary. Real GDP Rate of Shift of 760 770 780 7E0o a10 s20 B30o 840 B50 Situation (billions Wage of dollars) Change AS Curve A 760 3.0 % shifts down B 780 1.5 % shifts down 800 0.0 % is stationary D 820 1.0 % shifts up 845 2.0 % shifts up Level of GDP d. Use the multipoint drawing tool to plot and label the Phillips curve on a scale diagram for this economy. Use all and only the points provided in the…
- The government increase its spending by $100. 1. Explain the effect of this change in government expenditure on AD 2.Explain the effect of this change on the short run equliibrumoutput and inflationThree ways to increase Consumption which would cause a shift right in the AD curve would be or orAccording to supply-side economists, the curve will shift to the caused by AD: right: more investment AD: left: more saving O AS: right: more investment AS: left: more saving money supply: right: lower interest rates