Using the AD-LRAS model, which of the following causes the price level to decrease and real potential GDP to increase? A(n) Group of answer choices increase in household taxes. decrease in the labor-force participation rate. increase in productivity. decrease in interest rates.
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The Aggregate Demand-Long-Run Aggregate Supply (AD-LRAS) model is a framework for analysing the macroeconomic dynamics of an economy. The two curves that make up the model are the Long-Run Aggregate Supply (LRAS) curve and the Aggregate Demand (AD) curve.
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- Hayek says that markets will heal themselves and that government should not intervene. How does the AD-AS model reflect Hayeks idea that governments cannot increase real GDP beyond the level that the free market economy is able to produce?In a Keynesian economy, please show and explain how would reducing marginal tax rates affect income and price levels in the name of AD-AS model.Using the AD/AS model, what would be an explanation for observing an increased price level and a decreased real GDP? Group of answer choices wages have increased. productivity has increased. the money supply has increased. the money supply has decreased.
- Using the AD-AS framework, demonstrate the impacts of spending on infrastructure and a tax cut on output and inflation in the short- run.Using the AD-AS model, which of the following statement better describe what has happened with the pandemic? a. The government discouraged people from engaging in economic activities, which shifted the AD curve left; meanwhile, the government forced the closure of most of the firms in the economy, which shifted the short-run AS curve left, leading to much lower production in the overall economy. b. The government discouraged people from engaging in economic activities, which shifted the AD curve left; meanwhile, the government forced the closure of most of the firms in the economy, which shifted the short-run AS curve left, leading to a lower natural rate of output in the overall economy. c. The government discouraged people from participating in economic activities, which shifted the AD curve right, causing a higher price level for the firm to produce more goods and services. Hence, the short-run aggregate supply shifts to the left, leading to much lower…How does AD/AS Model Incorporates Economic Growth, unemployment, and inflation. Identify periods of economic growth and recession using the AD/AS models. Explain how unemployment and inflation impact the AD/AS model. Evaluate the importance of AD/AS models from a macroeconomic standpoint and analysis.
- What is the condition of the U.S. economy now (phase of business cycle, GDP growth rate, unemployment rate, inflation rate)? What actions have the U.S. government taken? What are the impacts of these actions in an AD-AS framework?Using the AD/AS model, what would be an explanation for observing an increased price level and a decreased real GDP? wages have increased. the money supply has decreased. productivity has increased. the money supply has increased.Use AD/AS model to solve the following problems. You have to DRAW and explain AD/AS model. Hydraulic fracturing ( fracking) has the potential to significantly increase the amount of natural gas produced in the United States. Assume a large percentage of factories and utility companies use natural gas. Scenario A: the economy is operating at full employment level of output. Scenario B: The economy is operating below full employment. what will happen to output, the price level, and employment as fracking becomes more widely used? LO1: Analyze the dynamic economic environment using economic notions and theories. LO2: Explain consumer and producer behavior and economic decision-making of economic units under different market structures. LO3: Describe and interpret measures of macroeconomic performance including potential efficiencies, government actions, and market forces.
- Using the AD-LRAS model, a decrease in capital accumulation and an increase in business taxes causes the Long-Run Aggregate Supply curve to ["", "", ""] and the Aggregate Demand curve to ["", "", ""] , respectively.Use AD/AS model to solve the following problem. You are expected to: 1. DRAW and explain with AD/AS model. Hydraulic fracturing (fracking) has the potential to significantly increase the amount of natural gas produced in the United States. Assume a large percentage of factories and utility companies use natural gas. In the following two scenarios, what will happen to output, the price level, and employment as fracking becomes more widely used? Scenario A: the economy is operating at full employment level of ouptput. Scenario B: The economy is operating below full employment.Suppose you are Herb Stein, Chair of Economic Advisors to President Ford. OPEC has just quadrupled the price of oil. The entire economy uses oil in manufacturing (exaggeration, but not a big one), consequently the costs reflected by the AS curve dramatically increase. Using the AD/AS model, what happens to output and prices? Same role, a recession with inflation now exists(stagflation), both are serious, 10% u/e, 14% inflation. You are thinking of proposing a solution to the recession, the negative GDP gap is $300 billion, the MPC is .75. Businesses won't increase Investment because of fear of losses You remember from your econ 101 class, that there is a multiplier effect for Government Expenditures. If you just want to fix this negative gap, how much Government expenditure would you propose? Same role, Using the AD/AS model, what would you expect to be the result of your proposal in the above question, with regard to output, and inflation? Does the degree of the shape of the AD/AS…