Economics (MindTap Course List)
13th Edition
ISBN: 9781337617383
Author: Roger A. Arnold
Publisher: Cengage Learning
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Question
Chapter 8, Problem 13QP
To determine
Explain whether the total spending is greater than money supply.
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Use the figure to answer the following questions. Explain your reasoning and show your answers on the graph. Copy the image to MSWord, and draw the appropriate lines using the 'design' tab and then select the shapes you want to include, lines, arrows, etc. Save your answer and upload your file.
a. At which equilibrium point the economy has an inflationary gap, and what is its value in percentage points?
b. At what point the economy is at full employment, and what is its value in trillions of dollars?
c. Draw an AD showing a recessionary gap of 0.5 trillion dollars.
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A change in any factor that influences our planned expenditure other than the price level, brings a change in aggregate demand. One of these factors is fiscal and monetary policy.”
In terms of the statement above, assess how fiscal and monetary policy influences aggregate expenditure in an economy. Use appropriate diagrams to motivate your answer.
Which economic policies affect a government's budget and include the increase or decrease the money supply?
Chapter 8 Solutions
Economics (MindTap Course List)
Ch. 8.2 - Prob. 1STCh. 8.2 - Prob. 2STCh. 8.2 - The money supply has risen, but total spending has...Ch. 8.3 - Prob. 1STCh. 8.3 - Prob. 2STCh. 8.3 - Prob. 3STCh. 8.5 - Prob. 1STCh. 8.5 - Prob. 2STCh. 8 - Prob. 1QPCh. 8 - Prob. 2QP
Ch. 8 - Prob. 3QPCh. 8 - Prob. 4QPCh. 8 - Prob. 5QPCh. 8 - Prob. 6QPCh. 8 - Prob. 7QPCh. 8 - Prob. 8QPCh. 8 - Prob. 9QPCh. 8 - Prob. 10QPCh. 8 - Prob. 11QPCh. 8 - Prob. 12QPCh. 8 - Prob. 13QPCh. 8 - Prob. 14QPCh. 8 - Prob. 15QPCh. 8 - Prob. 16QPCh. 8 - Prob. 17QPCh. 8 - Prob. 18QPCh. 8 - Prob. 19QPCh. 8 - Prob. 20QPCh. 8 - Prob. 21QPCh. 8 - Prob. 1WNGCh. 8 - Prob. 2WNGCh. 8 - Prob. 3WNGCh. 8 - Prob. 4WNGCh. 8 - Prob. 5WNGCh. 8 - Prob. 6WNG
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- The economy goes into recession. Which of the following lists contains things policymakers could do to try to end the recession? a. Increase the money supply, increase taxes, decrease government spending b. Decrease the money supply, increase taxes, decrease government spending c. Increase the money supply, increase taxes, increase government spending d. Increase the money supply, decrease taxes, increase government spendingarrow_forwardThe money supply has risen, but total spending has declined. Is this state of affairs possible? Explain your answer.arrow_forwardAn increase in household consumption may increase output and the price level. Explain how monetary and fiscal policies can be used to keep the stability of the price level. Use relevant graphs to support your answer.arrow_forward
- Suppose most business executives expect a slowdown in the economy. How might this situation affect the economy?arrow_forwardUsing an AD-AS diagram, explain what happens if personal income taxes increase.arrow_forwardCan demand management policies be used to combat stagflation? Explain your answer.arrow_forward
- Define what economists mean when they use the word: “recession”?arrow_forwardIf an economy is not expanding and the economy is therefore suffering from high unemployment, then would putting more money in the economy make matter better or worsearrow_forwardUsing a macroeconomics demand/supply analysis, where do you think current output is relative to what the economy is capable of producing? Look at recent trends in the data. What are the recent trends in the components of aggregate demand (consumption spending, investment spending, government purchases, and exports and imports?arrow_forward
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