11. During a two-quarter period of the lockdown for the COVID pandemic, we observed a decrease in realGDP and approximately no change in the GDPdeflator (treat the percentage change as 0 as a good approximation). From this, we inferred evidence of decreases (leftward shifts) in both Aggregate Supply and Aggregate Demand. Focus on the decrease in Aggregate Demand. During this period the money supply increased. From this information, we infer that O there must have been an increase in business investment demand. O there must have been a mistake in calculating the change in realGDP O there must have been a decrease in net exports. there must have been an increase in net exports. O there must have been a decrease in the velocity of money.

11. During a two-quarter period of the lockdown for the COVID pandemic, we observed a decrease in realGDP and approximately no change in the GDPdeflator (treat the percentage change as 0 as a good approximation). From this, we inferred evidence of decreases (leftward shifts) in both Aggregate Supply and Aggregate Demand. Focus on the decrease in Aggregate Demand. During this period the money supply increased. From this information, we infer that O there must have been an increase in business investment demand. O there must have been a mistake in calculating the change in realGDP O there must have been a decrease in net exports. there must have been an increase in net exports. O there must have been a decrease in the velocity of money.

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter24: The Influence Of Monetary And Fiscal Policy On Aggregate Demand

Section: Chapter Questions

Problem 3CQQ

See similar textbooks

Similar questions

3)Show and explain the effects of an increase in aggregate demand in the long-run and short-run by using AD–AScurves.2)Show and explain by using a graph, what will happen to the price level and real GDP if the quantity of moneyincreases and the increase is not anticipated; that is, the price level is not expected to change.1)By using aggregate demand (AD) and aggregate supply (AS) curves, show and explain the effects of ananticipated increase in money supply on macroeconomic equilibrium according to Rational ExpectationsHypothesis.
explain the likely effects of U.S boom on the demand for canadian exports.what woukd be the effect of canadian aggregate demand?suppose the bank of canada viewed its monetary policy as being appropriate for keeping gdp of canada close to potential gdp . what would you hen predict to be the central bank's response to foriegn boom in U.S
The Short-Run Aggregate Supply Curve (AS) is given by: y=20pAnd the Short-Run Aggregate Demand Curve (AD) is given by: y=25,000−20p Suppose instead that the Central Bank wanted to take action to keep the price-level completely stable. This would entail keeping it constant at its current rate. Suppose also that the Central Bank targets the interest rate directly. Suppose also that: • The Marginal Propensity to Spend is 0.75. • Every 1% increase in the interest rate leads to a decrease in Autonomous Consumption of 250 and a decrease in Autonomous Investment of 250. How much would the Central Bank need to change the current interest rate in order to keep the price level from changing through the medium-term as this output gap closes in the economy?
a. Explain why the aggregate short-run aggregate supply curve is upward sloping? b. What is the theory of liquidity preference? c. How does it help to explain the downward slope of the aggregate demand cure?d. Suppose that changes in the bank regulations expand the availability of credit cards so that people need to hold less cash.(i) How does that affect the demand for money? (ii) If the Central Bank does not respond to this event, what will happen to the price level?
If a central bank buys government securities from the private sector-money markets,leading to an expansion of the money supply, other things being equal, what would theeffect be on the following?(d) Aggregate Supply(e) Aggregate Demand(f) Economic activity(g) Price level of the economy can you help giving me these 4 ans.
As you have learned in Unit 8 (this week), monetary and fiscal policy play important roles in economic stimulation and or stabilization. In this regard: a. When is it appropriate to use monetary and fiscal policy to stimulate or stabilize the economy? b. When is it inappropriate to use monetary and fiscal policy to stimulate or stabilize the economy? c. What specific fiscal policy tools would you use to stimulate aggregate demand and how? d. What specific monetary policy tools would you use to stimulate aggregate demand and how? e. What is your conclusion, should policymakers use the monetary and or fiscal policy to stimulate aggregate demand? Explain briefly.