FiscalPolicy Ch22

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Question 4 Fiscal Policy and ADAS (4 points) The following table has data on aggregate demand and short-run aggregate supply. AD (billions) $700 SRAS (billions) $100 Price Level 25 50 600 200 75 500 300 100 400 400 125 300 500 150 200 600 700 175 100 Graph the aggregate demand and short-run supply curves. Suppose the economy is in long-run equilibrium but policymakers erroneously believe that the full-employment level of GDP is $600 billion. What is likely to happen in this economy?

Aggregate Supply and Aggregate Demand show the relationship between economic output (GDP) and price levels in the macro-economy at a given point in time. Define the terms ‘Aggregate Demand’ and ‘Aggregate Supply.’ State TWO (2) monetary and TWO (2) fiscal policies that government can adopt, to effect change in Aggregate Demand.

Use the following table which shows the aggregate demand and aggregate supply schedules for a hypothetical economy to answer the next question.    The equilibrium price and output levels will be   Multiple Choice   300 and $8,000.   200 and $5,000.   200 and $6,000.   250 and $7,000.

© Economics Learning Center Online Classes - Final Mock Exam (1) Price Level (Index Value) Real Domestic Output Real Domestic Output Demanded (in Billions) Supplied (in Billions) $3,000 350 $9,000 4,000 300 8,000 5,000 250 7,000 6,000 200 6,000 7,000 150 5,000 8,000 100 4,000 16) The accompanying table shows the aggregate demand and aggregate supply schedules for a hypothetical economy. 2 A) The equilibrium price and output levels will be B) At the price level of 150, What will happen in the economy? Why? C)At the price level of 350, What will happen in the economy? Why? 2nd Semester 2021/2022

The table below illustrates the aggregate demand and aggregate supply schedules of country A: Price level Quantity demanded of Quantity supplied of real GDP (CPI) real GDP (Short run) (€ bill.) (€ bill.) 90 450 350 100 400 400 110 350 450 120 300 500 130 250 550 140 200 600 1) What is the short run macroeconomic equilibrium in country A? 2) If potential GDP is €500 bill., is there an inflationary or recessionary gap and what is its size? 3) What is real GDP and price level if aggregate demand increases by €100 billion? 4) What is real GDP and price level if money wages (salaries) increase and the short run aggregate supply changes by €100 billion? 5) What is real GDP and price level if potential GDO increases by €150 billion?

Identify the word, concept, or expression most closely related to the word, concept, or expression below: 1. Short-run effect of an increased number of Canadians vacationing and shopping at home. Choose one of the following: product prices fall and output rises, product prices fall and output falls, product prices rise and output falls, product prices rise and output rises, prices remain unchanged and output rises, product rises and output remains unchanged 2. Short-run effect of increased government spending on infrastructure. Choose one of the following: product prices fall and output rises, product prices fall and output falls, product prices rise and output falls, product prices rise and output rises, prices remain unchanged and output rises, product rises and output remains unchanged 3. Short-run effect of a large increase in commodity (input) prices for businesses. Choose one of the following: product prices fall and output rises, product prices fall and output falls, product…

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Suppose that the aggregate demand and aggregate supply schedules for a hypothetical economy are as shown below: Amount of Real GDP Demanded, Billions Price Level (Price Index) Amount of Real GDP Supplied, Billions $100 300 $450 200 250 400 300 200 300 400 150 200 500 100 100   Plot the change in demand curve. 1. There was increase in price level from P200 to P250. 2. There was decrease in price from P200 to P150.

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Please dear expert hand written is not allowed.

Durable goods and non-durable goods comprise approximately ________ of the supply side of the GDP.   1% 20% 30% 55%

Question: How does the concept of aggregate demand relate to overall economic output, and what factors can influence changes in aggregate demand? A) Aggregate demand represents the total wealth of a nation and is unaffected by external factors. B) Aggregate demand is the total spending in an economy and includes consumption, investment, government spending, and net exports; factors like changes in consumer confidence can influence it. C) Aggregate demand solely considers government spending and is unrelated to economic output. D) Aggregate demand is the total production in an economy and is determined solely by government policies.

10) Fiscal policy is defined as changes in federal ________ and ________ to achieve macroeconomic objectives such as price stability, high rates of economic growth, and high employment. A) taxes; interest rates B) taxes; expenditures C) interest rates; money supply D) taxes; money supply

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4. Equilibrium The following table shows the real output demanded and supplied at various price levels in a hypothetical economy. Real Output Demanded (Billions of dollars) 10 20 30 50 80 Price Level (Index number) 160 120 80 40 20 Real Output Supplied (Billions of dollars) 85 80 70 50 20 On the following graph, use the blue points (circle symbol) to plot the aggregate demand (Initial AD) curve for the economy. Then use the orange points (square symbol) to plot the aggregate supply (AS) curve for the economy.

Question 5 Which of the following BEST shows fiscal policy? The Federal Reserve buys bonds. The United States increases trade with China. Oc The Central Bank decides to print more money. Congress passes a decrease in taxes. ©2021 Illuminate Educatin

Question 13 (Mandatory) (1 point) Consider the nature of macroeconomic equilibrium. If, at a particular price level, aggregate output demanded is less than that supplied by producers, then O the price level will rise toward its equilibrium value. the aggregate supply curve will shift to the left, re-establishing an equilibrium. the price level will decline toward its equilibrium value. the aggregate demand curve will shift to the right, re-establishing an equilibrium. the aggregate supply curve will shift to the right, re-establishing an equilibrium.

(3) "The aggregate demand curve slope slopes downward because when the price level is lower, people can afford to buy more, lead to the rise in aggregate demand. When price rises, people can afford to buy less, resulting to the fall in aggregate demand. It is therefore very much an extension of the Law of Demand in Microeconomics." Is this a good explanation of the shape of the AD curve? Why or why not?

Note: Line segments will automatically connect the points. PRICE LEVEL (Billions of dollars) 200 160 120 0 80 160 240 REAL GDP (Index numbers) The equilibrium price level is 320 400 Initial AD The change in government spending the multiplier effect. SRAS New AD ✓, and the equilibrium level of real output is Suppose that the government spending increases by $16 billion and the expenditure multiplier in this economy is 5. On the previous graph, use the purple points (diamond symbols) to illustrate the effect of the increase in government spending on the aggregate demand (New AD) curve. the equilibrium level of real output by . The price level increase

5. Macroeconomic equilibrium and the ranges of the aggregate supply curve The following graph shows the aggregate demand (AD₁) and aggregate supply (AS) curves for a hypothetical economy with full-employment output of $11 trillion. PRICE LEVEL (CPI) 130 125 120 115 110 105 100 95 90 8.0 8.5 9.0 AD₁ AS 10.0 10.5 11.0 9.5 REAL GDP (Trillions of dollars) 11.5 12.0 A The decrease in aggregate demand leads to a movement along the to and the equilibrium level of real GDP to AD₂ Macro Eq 2 ? Suppose the level of real GDP supplied by firms is $10.5 trillion and the price level is 105. In this case, the quantity of real GDP supplied is GDP demanded at a price level of 105, and firms will experience an unplanned producing output until the economy reaches macroeconomic equilibrium at a price level of the real in inventories. Firms will respond to the change in inventories by and real GDP of Suppose consumers and businesses become less optimistic about future economic conditions, causing the…

Ch1 economics

Consider schedule #1 in the aggregate demand and aggregate supply table given below. The equilibrium output and price level for the economy described on this schedule are: Table 10.1 Quantity of Quantity of Aggregate Output Price Aggregate Output Supplied Demanded Level # 1 #2 # 3 $7.0 110 $5.0 $6.0 $4.0 6.5 120 5.5 6.5 4.5 6.0 130 6.0 7.0 5.0 5.5 140 6.5 7.5 5.5 5.0 150 7.0 8.0 6.0 a. $6.0 and 130, respectively. O b. $6.5 and 120, respectively. c. $5.0 and 150, respectively. d. $5.5 and 140, respectively. e. $7.0 and 110, respectively.

9. Use of discretionary policy to stabilize the economy Should the government use monetary and fiscal policy in an effort to stabilize the economy? The following questions address the issue of how monetary and fiscal policies affect the economy, as well as the pros and cons of using these tools to combat economic fluctuations. The following graph plots hypothetical aggregate demand (AD), short-run aggregate supply (AS), and long-run aggregate supply (LRAS) curves for the U.S. economy in February 2026. Suppose the government chooses to intervene in order to return the economy to the natural level of outraut by using a contractionary Depending on which curve is affected by the government policy, shift either the AS curve or the AD curve to reflect the change that would successfully restore the natural level of output. PRICE LEVEL 150 130 110 90 AS AD 10 AD 1 policy. AS

9. Use of discretionary policy to stabilize the economy Should the government use monetary and fiscal policy in an effort to stabilize the economy? The following questions address the issue of how monetary and fiscal policies affect the economy, as well as the pros and cons of using these tools to combat economic fluctuations. The following graph plots hypothetical aggregate demand (AD), short-run aggregate supply (AS), and long-run aggregate supply (LRAS) curves for the U.S. economy in March 2026. Suppose the government chooses to intervene in order to return the economy to the natural level of output by using policy. Depending on which curve is affected by the government policy, shift either the AS curve or the AD curve to reflect the change that would successfully restore the natural level of output. Depending on which curve is affected by the government policy, shift either the AS curve or the AD curve to reflect the change that would successfully restore the natural level of…

Fiscal policy: Fiscal policy refers to the use of government spending and taxation to influence the economy. In the case of a severe negative supply shock, the government may increase spending to stimulate demand and offset the reduction in supply. For example, the government may invest in infrastructure projects to create jobs and boost economic growth. However, this may lead to an increase in government borrowing and higher interest rates, which can offset the benefits of the fiscal stimulus. show this graphically please.

The following graph shows the aggregate demand curve. Shift the aggregate demand curve on the graph to show the impact of a tax cut. (? 130 120 Aggregate Demand 110 100 90 Aggregate Demand 80 70 10 20 30 40 50 60 OUTPUT PRICE LEVEL

5. Keynesian three-part aggregate supply The following graph shows the three-part Keynesian aggregate supply curve hypothesized by Keynesians in the late 1940s. Aggregate supply GDP full employment REAL GDP Indicate which part of the aggregate supply curve on the previous graph captures each of the following three situations. Flat Horizontal Part Upward Sloping Part Vertical Part All input markets "clear" Some, but not all, input markets experience shortages Recessions and depressions with stable prices Evaluate the following statement: True or False: The three-part Keynesian AS curve suggested the existence of a trade-off between inflation and unemployment. O False O True PRICE LEVEL

Describe how different parts of the economy may have experienced shifts and changes in supply and demand. Provide at least 4 examples.

Problem 12-09 (algo) The CARES Act of 2020 increased disposable income by $600 billion. If consumers spent $430 billion of those income transfers immediately, Instructions: In part a, round your response to two decimal places. In part b, round your response to the nearest whole number. a. what was the MPC? b. how much stimulus would those income transfers ultimately provide?