sing the AD/AS Model, construct 2 graphs that show how higher rates of inflation can occur. Explain how discretionary fiscal or monetary policies can be used to bring down the inflation rate.
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Using the AD/AS Model, construct 2 graphs that show how higher rates of inflation can occur. Explain how discretionary fiscal or
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- Using two AD/AS diagrams, explain cost-push and demand-pull inflation.Give a one line definition for the term "DEFICIENT DEMAND" In macro economics.Suppose an economy is hit by natural disaster and its natural resources decreases. Show graphically using AD-AS model how the price level and output are affected in the short-run. Can the government use monetary policy to offset the effects on both price level and output simultaneously, explain?
- How does each policy handle the two major macroeconomic failures of unemployment and inflationUse two graphs in the AD-AS framework to compare and contrast demand-pull and cost-push inflation. How do their causes differ? How do the outcomes (inflation, output, employment) differ?Draw a macro equilibrium using AD/AS. Clearly label all important points on your graph. Show how an expansionary Fiscal Policy affects the equilibrium price level and GDP. What can be said about the trade off between inflation and unemployment in this model?
- 1) Plot the following markets on a graph: Government market: using 50 jets for Q and $5 billion for P as point A (equilibrium). AD/AS graph: using 19.1 trillion for RGDP and 1.9% for inflation as point A (equilibrium). How will our AD/AS graph look like when U.S. government buys less jets in the government market? 2) Plot the following markets on a graph: Labor market: using 5 laborers and $5.00 for wage as point A (equilibrium). AD/AS graph: using 19.1 trillion for RGDP and 1.9% for inflation as point A (equilibrium). How will our AD/AS graph look like when Congress implements an income tax hike in the labor market?What can be a reason why inflation is not occuring when government spending increases in an economy?Explain why a sudden, large burst of inflation could lead to a recession?
- The AD/AS model is static. It shows a snapshot of the economy at a given point in time. Both economic growth and inflation are dynamic phenomena. Suppose economic growth is 3% per year and aggregate demand is growing at the same rate. What does the AD/AS model say the inflation rate should be?How is long-term growth illustrated in an AD/AS model? Draw a graph of the AD/AS model and show the effect of long-term growth from period 1 to period 2. Include the effect of a resulting expansion of the money supply by the Fed.Using the AD-AS model, discuss the money neutrality in the short-run and in thelong-run.
