20) Spending on the war in Afghanistan is essentially categorized as government purchases. How do increases in spending on the war in Afghanistan affect the aggregate demand curve? A) They will move the economy up along a stationary aggregate demand curve.

20) Spending on the war in Afghanistan is essentially categorized as government purchases. How do increases in spending on the war in Afghanistan affect the aggregate demand curve? A) They will move the economy up along a stationary aggregate demand curve.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter26: The Neoclassical Perspective

Section: Chapter Questions

Problem 9RQ: A neoclassical economist and a Keynesian economist are studying the economy of Vineland. It appeals...

See similar textbooks

Related questions

Q: The federal government tends to increase their spending to get the economy out of recession. Explain…

A: Recession refers to the situation of slowdown in economic activities. During the recession, the…

Q: 1.3. A decrease in aggregate supply is represented by

A: Aggregate supply decreases when the cost and other expenses of production increases.

Q: Question 39 In a hypothetical economy, if income increases by $1 in the first round of the…

A: Income increases in each round by Round 1 by $1 Round 2 by MPC* $1 = $0 58.

Q: 21) Ceteris paribus, a decrease in exports leads to a: movement up and to the left along the same…

A: 21) Given Ceterus paribus, a decrease in exports leads to what. Ceterus paribus means all the…

Q: Identify which expenditure category each of the following will directly impact, and also which…

A: Answer - Need to find- Identify which expenditure category each of the following will directly…

Q: 7) Spending on the war in Afghanistan is essentially categorized as government purchases. How do…

A: Aggregate demand is the total demand in an economy which consists of demand by household…

Q: 5. An economy is initially in equilibrium, both in the short-run and in the long-run. Using the AD,…

Q: If aggregate demand increases while aggregate supply is constant in an economy in the short run,…

A: In the short run we have upward sloping supply curve and downward sloping demand curve. If aggregate…

Q: 3. Diagrammatically represent and explain what happens if the economy is at its long-run equilibrium…

A: In a utterly competitive market, the long-term equilibrium happens once marginal revenue equals…

Q: Identify factors that would cause consumption spending to increase. What effect would that have on…

A: Consumer spending is the overall money expended for personal use and pleasure in an economy by…

Q: Question 16 The economy is in a recession The government enacts a policy to increase the real GDP by…

A: The economics as a study is based upon the idea that the economies around the world tend to have a…

Q: 18 - : If aggregate demand increases in an economy while aggregate demand is constant in the short…

A: NOTE: We’ll answer the first question since the exact one wasn’t specified. Please submit a new…

Q: Which of the following will cause a decrease in aggregate demand? A) Increase in government…

A: Income taxes affect the consumption component of aggregate demand. a rise in income taxes reduces…

Q: The expenditure and tax multiplier . Take an example 2. Short-run and long-run aggregate supply.…

A: The expenditure multiplier shows what impact a change in autonomous spending will have on total…

Q: Explain with example how a reduction in taxes without a reduction in government spending may have no…

A: The economies around the world tend to focus on their growth, stability in the financial, and…

Q: Suppose that an economy that is initially in equilibrium sees an increase in investment spending.…

A: Equilibrium in the market of goods and services occurs at the intersection of aggregate demand and…

Q: Question 10: Assume an economy operates in the intermediate range of its aggregate supply curve. For…

A: Free goods don’t require resources to produce them as they are available freely in nature. Therefore…

Q: Discussion Questions Chp. 13 Fiscal policy consists of intentional changes in the government's…

A: Changes in the government expenditure affect the equilibrium price and real quantity. Government…

Q: Q. 4 For each of the following statements , show graphically and explain the expected effets of the…

A: The aggregate demand (AD) shows the negative relation between the price level and real GDP. It has…

Q: E4 In the fall of 2021, the United States enacted a $1.2 trillion infrastructure bill that provided…

A: In the aggregate demand-aggregate supply model, the equilibrium occurs where the aggregate supply…

Q: In response to the demands of environmentalists, large sections of timberlands are put off limits to…

A: Due to a rise in the demand for environmentalists, there is logging of large sections of timberlands…

Q: The stock market experienced massive growth following President Trump's election in 2016, surging…

A: Massive growth following President Trump's election in 2016 There was a massive growth in the stock…

Q: 1. As the aggregate demand curve shifts to the right:

A: Shift in aggregate demand will have effects on both price level and real GDP.

Q: n due to the poor economy, government officials have decided to cut taxes. They are considering two…

A: Tax cuts are considered to be reductions to the amount of money of taxpayers which in turn goes…

Q: Which of the following will shift the aggregate demand curve to the right? a.A new technology is…

A: Aggregate demand is the sum of consumption, investment, government spending and net exports in an…

Q: Question 6: Assume an economy operates in the intermediate range of its aggregate supply curve. For…

A: Aggregate demand: It is the summation of demand for all the goods and services that are demanded in…

Q: Explain the likely effects of a U.S. boom on the demand for Canadian exports. What would be the…

A: Depreciation/devaluation -: It refers to fall in value of exchange rate – exchange rate…

Q: Which of the following would increase aggregate demand? A) Increase in taxation. B)…

A: The aggregate demand curve in Keynesian economics shows all the combinations of output level and…

Q: Using a diagram, show and explain why rising prices reduce the multiplier effect of an increase in…

A: Aggregate demand is the total amount of demand for all finished goods and services produced in a…

Q: 19. What sequence of events results from a decrease in aggregate demand? PI, inventories Į, firms…

A: A decrease in aggregate demand leads to a result of sequence which is explained in the next step.

Q: Which of the following is not a reason for the increase in aggregate demand? a. Decrease in imports…

A: Aggregate demand shows the total quantity of goods and services demanded at different price levels.

Q: Refer to Figure 12.2. Firms respond to an increase in government spending by mostly raising their…

A: AS-AD model is one of the most important models of macroeconomic analysis to determine the…

Q: other things equal, which of the following would be expected to shift aggregate demand to the right?…

A: Aggregate demand is the amount of goods and services produced in an economy at given prices and…

Q: Suppose that the government reduces spending on highway construction by $10 billion . Which way does…

A: Crowding out effect:It refers to the situation that occurs when there is a rise in government…

Q: 7. Supply-side effects Consider a fictional economy that is operating at its long-run equilibrium.…

A: Aggregate demand represent to amount that a producer is expecting to receive after the output…

Q: If aggregate demand increases in an economy while aggregate demand is constant in the short run,…

A: An increase in consumption and investment leads to an increase in the aggregate demand for goods and…

Q: 3. Currently, there is world-wide shortage of computer microchips. Determine the effects on: a.…

A: Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…

Q: TRUE/FALSE According to our discussion of supply side economics, there are positive aggregate demand…

A: The supply-side theory of economic growth is an economic theory that states that increasing the…

Question

8:31 1
ll
DJ AII UN LIit abuv t ait luiT TLt.
20) Spending on the war in Afghanistan is essentially
categorized as government purchases. How do
increases in spending on the war in Afghanistan affect
the aggregate demand curve?
A) They will move the economy up along a stationary
aggregate demand curve.
B) They will move the economy down along a
stationary aggregate demand curve.
C) They will shift the aggregate demand curve to the
left.
D) They will shift the aggregate demand curve to the
right.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

Suppose firms become optimistic about futurebusiness conditions and invest heavily in new capitalequipment.a. Draw an aggregate-demand/aggregate-supplydiagram to show the short-run effect of thisoptimism on the economy. Label the new levels ofprices and real output. Explain in words why theaggregate quantity of output supplied changes.b. Now use the diagram from part (a) to show thenew long-run equilibrium of the economy. (Fornow, assume there is no change in the long-runaggregate-supply curve.) Explain in words whythe aggregate quantity of output demanded changesbetween the short run and the long run.c. How might the investment boom affect thelong-run aggregate-supply curve? Explain.
4.2 List and discuss two (2) reasons for the downward sloping shape of theaggregate demand curve.
Explain why the following statements are false.a. “The aggregate-demand curve slopes downwardbecause it is the horizontal sum of the demandcurves for individual goods.”b. “The long-run aggregate-supply curve is verticalbecause economic forces do not affect long-runaggregate supply.”
1. When the federal government engages in COVID-19 fiscal stimulus such as the Coronavirus Aid, Relief, and Economic Security (CARES) Act and the American Rescue Plan Act this will affect the AD-AS model by: Group of answer choices a. Decreasing aggregate demand (AD). b. Increasing aggregate demand (AD). c. Decreasing aggregate supply (AS). d. Increasing aggregate supply (AS).
When one focuses on aggregate demand and aggregate supply in macroeconomics, the main focus is on..... a. whether the goods are useful and wanted by consumers. b. whether the goods generate either positive or negative externalities c. what total spending is in relation to total production and its effects on the macroeconomic problems of unemployment and inflation d. both a) and b) are correct
Suppose that the government reduces spending on highwayconstruction by Ghc10 billion.• Which way does the aggregate-demand curve shift?• Explain why the shift might be larger than Ghc10 billion.• Explain why the shift might be smaller than Ghc10 billion
Explain whether each of the following events shiftsthe short-run aggregate-supply curve, the aggregatedemand curve, both, or neither. For each event thatdoes shift a curve, draw a diagram to illustrate theeffect on the economy.a. Households decide to save a larger share of theirincome.b. Florida orange groves suffer a prolonged period ofbelow-freezing temperatures.c. Increased job opportunities overseas cause manypeople to leave the country.
An economy is described by the following: C=20+0.9Y I=120-200r. Md=250+0.2Y-400r. Ms/P=1250 Y=70 W=17.5 Lf=144 a) Find AS and AD. b) Find the equilibrium level of Y and P c) Graphically represent this economy d) Find the long-run Y of this economy. e) What is the level of government expenses G, the government needs to impose in order to lead the economy to the full employment? (Show the long-run graphically).
Consider a hypothetical economy in which households spend $0.75 of each additional dollar they earn and save the remaining $0.25. The following graph shows the economy's initial aggregate demand curve (AD1AD1). Suppose the government increases its purchases by $3.75 billion.
A neoclassical economist and a Keynesian economist are studying the economy of Vineland. It appeals that Vineland is beginning to experience a mild recession with a decrease in aggregate demand. Which of these two economists would likely advocate that the government of Vineland take active measures to reverse this decline in aggregate demand? Why?