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4.2 List and discuss two (2) reasons for the downward sloping shape of the
aggregate
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- What is supply side economics and what is the general assessment of the efficacy of supply-side economics?Describe how different parts of the economy may have experienced shifts and changes in supply and demand. Provide at least 4 examples.Discuss the three main supply-side policies that the government can use to reduceunemployment?
- 14) Detail the workings of the New Keynesian Dynamic Stochastic Equilibrium model.explain the role of supply side policy in macro economic policyThe following graph shows an increase in aggregate supply (ASAS) in a hypothetical economy. Specifically, aggregate supply shifts to the right from AS1AS1 to AS2AS2, causing the quantity of output supplied at a price level of 125 to rise from $250 billion to $350 billion. The following table lists several determinants of aggregate supply. Complete the table by indicating the changes in the determinants necessary to increase aggregate supply. Determinant Change Needed to Increase ASAS Nominal Wage Rate Tax Rates Technology
- Which of the following is not a doctrine of modern macroeconomics? A. Spending drives prices, production, income and employment in the short run B. Lower interest rates are required to increase investment spending during recession C. Depressions occur because prices adjust too rapidly to change in supply and demand D. Economic activity can be described in terms of mechanical interaction among aggregates like consumption, investment and GDPWhich of the following statements concerning the aggregate demand and aggregate supply model is correct? a. The aggregate demand and aggregate supply model is nothing more than a large version of the model of market demand and supply. b. The price level and quantity of output adjust to bring aggregate demand and supply into balance. c. The aggregate supply curve shows the quantity of goods and services that households, firms, and the government want to buy at each price. d. The aggregate demand shows the quantity of goods and services that firms are willing to produce at a given price level.Discuss the impact of taxes and autonoumous consumption on the price level.
- The following graph shows a decrease in aggregate demand (AD) in a hypothetical country. Specifically, aggregate demand shifts to the left from AD1AD1 to AD2AD2, causing the quantity of output demanded to fall at all price levels. For example, at a price level of 140, output is now $200 billion, where previously it was $300 billion. The following table lists several determinants of aggregate demand. Complete the table by indicating the change in each determinant necessary to decrease aggregate demand. Change needed to decrease AD Wealth (increase/ decrease) Taxes (increase/ decrease) Expected rate of return on investment (increase/ decrease) Incomes in other countries (increase/ decrease)Complete the following table by matching the macroeconomic assumptions about aggregate supply to the appropriate school of thought. Assumption Classical Keynesian Only an increase in aggregate demand can move an economy out of a recession and back to potential real GDP quickly. Product prices and wages tend to be inflexible. The following graph shows the aggregate demand (ADAD) and aggregate supply (ASAS) curves for a hypothetical economy that is currently operating below its full-employment output level. That is, the economy is currently in a recession. The aggregate supply curve (ASAS) in this diagram is consistent with the view of aggregate supply. According to this viewpoint, the government should spending in response to the recession. Shift the appropriate curve on the graph to illustrate the impact of this change in government spending. ADASPRICE LEVELREAL GDP (Trillions of dollars)AD AS The prescribed…How is the aggregate supply curve affected by (a) minimum wage laws and (b) Social Security payroll taxes and retirement benefits?
