Macroeconomics (Book Only)
12th Edition
ISBN: 9781285738314
Author: Roger A. Arnold
Publisher: Cengage Learning
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Question
Chapter 10, Problem 13QP
To determine
Increase in savings and impact over the AD curve.
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Use the following scenario for the next two questions. Suppose that the federal government decides to forgive
all current (and future) outstanding student loans (estimated to total around $1.6 trillion as of early 2020). When
thinking about the AD/AS model, which curve would this shift in the short-run, and in which direction?
AD curve, to the left
AD curve, to the right
OSRAS curve only, to the right
OSRAS and AD curves, to the left.
OSRAS and LRAS curves, to the left
Would a shift of AD to the right tend to make the equilibrium quantity and price level higher or lower? What about a shift of AD to the left?
Name some factors that could cause the SRAS curve to shift, and say whether they would shift SRAS to the right or to the left.
Chapter 10 Solutions
Macroeconomics (Book Only)
Ch. 10.1 - Prob. 1STCh. 10.1 - Prob. 2STCh. 10.1 - Prob. 3STCh. 10.2 - Prob. 1STCh. 10.2 - Prob. 2STCh. 10.2 - Prob. 3STCh. 10.3 - Prob. 1STCh. 10.3 - Prob. 2STCh. 10.3 - Prob. 3STCh. 10.4 - Prob. 1ST
Ch. 10.4 - Prob. 2STCh. 10 - Prob. 1VQPCh. 10 - Prob. 2VQPCh. 10 - Prob. 3VQPCh. 10 - Prob. 4VQPCh. 10 - Prob. 5VQPCh. 10 - Prob. 1QPCh. 10 - Prob. 2QPCh. 10 - Prob. 3QPCh. 10 - Prob. 4QPCh. 10 - Prob. 5QPCh. 10 - Prob. 6QPCh. 10 - Prob. 7QPCh. 10 - Prob. 8QPCh. 10 - Prob. 9QPCh. 10 - Prob. 10QPCh. 10 - Prob. 11QPCh. 10 - Prob. 12QPCh. 10 - Prob. 13QPCh. 10 - Prob. 14QPCh. 10 - Prob. 15QPCh. 10 - Prob. 16QPCh. 10 - Prob. 17QPCh. 10 - Prob. 18QPCh. 10 - Prob. 19QPCh. 10 - Prob. 20QPCh. 10 - Explain how to derive a total expenditures (TE)...Ch. 10 - Prob. 22QPCh. 10 - Prob. 23QPCh. 10 - Prob. 24QPCh. 10 - Prob. 25QPCh. 10 - Prob. 1WNGCh. 10 - Prob. 2WNGCh. 10 - Prob. 3WNGCh. 10 - Prob. 4WNGCh. 10 - Prob. 5WNGCh. 10 - Prob. 6WNGCh. 10 - Prob. 7WNGCh. 10 - Prob. 8WNG
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- Use the AD - AS model in the figure below to answer the following questions. Suppose the economy is currently experiencing an inflationary gap, without any government policy intervention, the economy would move from ◻ a) C to D b) B to A c) C to B d) A to E e) E to Aarrow_forwardDoes the AD curve shift?arrow_forwardIf the economy is operating in the neoclassical zone of the SRAS curve and aggregate demand falls, what is likely to happen to real GDP?arrow_forward
- Three ways to increase Consumption which would cause a shift right in the AD curve would be or orarrow_forwardHow would a dramatic increase in the value of the stock market shift the AD curve? What effect would the shift have on the equilibrium level of GDP and the price level?arrow_forwardWhat is the neoclassical zone of the SRAS curve? How much is the output level likely to change in the neoclassical zone?arrow_forward
- If the economy is operating in the Keynesian zone of the SRAS curve and aggregate demand falls,what is likely to happen to real GDP?arrow_forwardWill the shift of SRAS to the right tend to make the equilibrium quantity and price level higher or lower? What about a shift of SRAS to the left?arrow_forwardThe AD curve can be shifted by...arrow_forward
- In the AD/AS model assume 2019 began with potential real GDP = $19.7 trillion, while actual real GDP = $19.0 trillion and the Price Level (GDP Deflator) = 210. A year later the Price Level = 214 and actual real GDP = $18.9. Based on their relative effects on the AD/AS model, which of the following scenarios best explains this new outcome? The effect of %3D Group of answer choices an increase in government spending is MORE than the effect of decreased electricity prices. an increase in wages is LESS than the effect of a decrease in government spending. a decrease in oil prices is MORE than the effect of positive consumer expectations. an increase in inflationary expectations is MORE than the effect of increased government spending.arrow_forwardWhat role do inventories play in the equilibrating process in the simple Keynesian model (as described in the TE-TP framework)?arrow_forwardWhich part of the AD/AS model is most applicable to Say's Law? AS curve AD curve flat portion of the AS curve steep portion of the AS curvearrow_forward
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