Answered: A policymaker claims that tax cuts led…

Business

Economics

A policymaker claims that tax cuts led the economy out of a recession. Can we use the AD/AS diagram to show this?

Macroeconomics

13th Edition

ISBN:9781337617390

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter10: Kenesian Macroeconomics And Economic Instability: A Critique Of The Self Regulating Economy

Section: Chapter Questions

Problem 3WNG

See similar textbooks

Related questions

Q: Graphically explain recessionary and inflationary gaps using AD and AS curves.

A: The below graph slows the recessionary gap and inflationary gap:

Q: Why might it be important for policy makers to know which in zone of the SRAS curve the economy is?

A: SRAS (Short run aggregate supply): It refers which shows the positive relationship between the…

Q: Why does a business cycle diagram serve as a forecasting model

A: Business cycle refers to the periodic upward and downward movement in the activities of buisness.

Q: Make a graph that shows where Indonesia currently is on the business cycle. Can you also include an…

A: The economies around the world work according to the changes in the changes in their consumption…

Q: If the government passes a law to increase all wages in an economy by 10%, what happens to the SRAS…

A: A typical short-run aggregate supply curve (SRAS) is an upward sloping curve depicting the…

Q: Create a graph that shows where Mexico currently is on the business cycle. Be sure to include an…

A: Mexico is currently running into recession attributing the pandemic situation and fiscal tightening…

Q: In the AD/AS model, what prevents the economy from achieving equilibrium at potential output?

A: Equilibrium will occur at the point where the aggregate demand (AD) & the aggregate supply (AS)…

Q: List any five factors that can shift the aggregate demand (AD) curve to the right.

A: Answer: Aggregate demand: aggregate demand refers to the total demand for domestic goods and…

Q: What is Aggregate Demand (AD)? Investigate three (3) causes that can shift the AD curve to the…

A: Consumption is the process of using products, services, and resources for survival.

Q: Does the AD curve shift?

A: AD (Aggregate demand) depicts sum dd (demand) for the nation and how it interconnects at the level…

Q: A rightward shift in the aggregate demand (AD) curve indicates

A: Aggregate Demand is the sum total of demand for goods and services demanded by the people of the…

Q: Using the static AS/AD model explain what impact covid-19 crisis have on the global economy?

A: The Covid-19 is an unusual macroeconomics shock. It impacted both supply and demand in the global…

Q: Hayek says that markets will heal themselves and that government should not intervene. How does the…

A: Hi. Since there are two questions, we will answer the first one. Friedrich Von Hayek states that…

Q: Using the dynamic AD/AS model, explain why Kennedy is concerned about the state of the global…

A: Aggregate demand(AD) is the sum of all the quantity demanded(QD) for goods and services that…

Q: Suppose the government of a typical developing country increased the salary of civil servants at a…

A: AD is negatively sloped while SRAS is positively sloped. The intersection between these gives the…

Q: If new government regulations require firms to use a cleaner technology that is also less efficient…

A: Aggregate demand: It refers to the total demand of an economy of various goods and services which…

Q: Using graphical illustration of AS-AD framework, show the effects of following events on real output…

A: D) When the government raises taxes by $100 billion: An increase in taxes will reduce the disposable…

Q: Will the shift of SRAS to the right tend to make the equilibrium quantity and price level higher or…

A: The total supply of goods and services that companies in a national economy expect to sell over a…

Q: What macro economics

A: Meaning of Economics: The term economics refers to the situation under which there remain…

Q: What does it mean to graph the effects of an un anticipated increase in the price level on the AD-AS…

A: Effects of an unanticipated increase in the price level on the AD-AS can be shown as:

Q: Recent economic reports forecast an increase in the interest rate, which likely increases…

A: Aggregate demand is affected by the change in the rate of interest. Higher rate of interest leads to…

Q: Author claims, “The pandemic was unexpected shock. Climate change and climate policy are known…

A: The aggregate demand curve shows the inverse relationship between the price level and the total…

Q: Market Watch, May 24, 2018 discusses, "what happens if the oil rally turns into an 'oil shock' ".…

A: Aggregate demand (AD) is the sum total amount of commodities and services demanded in an economy at…

Q: Why did Keynes believe that the proper response to a period of recession was for the government to…

A: Keynes' macroeconomic view is referred to as the most practical view in economics as it deals with…

Q: What is macro economics describe briefly?

A: Economics: It is a branch of knowledge that is related to the production, consumption, and transfer…

Q: Using AD-AS diagram show how the change in productivity in the Ghanaian economy in 2017 affected the…

A: Aggregate Demand -: It refers to the amount of total spending…

Q: Using a standard SAS/ AD model, show how recent decreases in world oil prices will likely impact the…

A: Aggregate demand (AD) is the sum total amount of commodities and services demanded in an economy at…

Q: Why/how has Covid-19 led to global economic recession?

A: Recession is a period which is characterized by significant decline in general economic activity.…

Q: Use the AD‐AS model graph to explain how the government can increase economic growth and reduce the…

A: Using the AS-AD model government can increase economic growth by expansionary fiscal policy. In…

Q: Do you think there is a risk of stangflation in the world in the current economic situation?

A: Stagflation is defined by slow economic growth, relatively high unemployment, or economic stagnation…

Q: Explain by using the AD- AS diagram how in absence of any government intervention the economy may…

A: When there is no government intervention. At the new level of the equilibrium output since Y'<…

Q: An improvement in technology causes which curve(s) to shift? SRAS, and LRAS curves The AD and SRAS…

A: Technology is one of the most important factor in the production of goods and services.

Q: Using AD and AS curves determine how an increase in the government's ability to improve…

A: A recession can be characterized as a supported time of feeble or negative development in genuine…

Q: What are the results of economic policies in Mexico and what do they look like in the short-run and…

A: Aggregate demand shows the relationship between aggregate quantity demanded of goods and services at…

Concept explainers

Policy Instruments for Environmental protection

Policy Instruments for Environmental Protection link policy development and decision making to policy implementation to protect the environment and promote sustainable development. Economic growth brings great risk to the environment and often puts increased pressure on environmental resources. But it is the responsibility of the policymakers to ensure that the risk caused to the environment through developmental projects is kept in check. Environmental protection is central to sustainable development. They can be both beneficial and equitable. Environment protection policies can be used to deter environmentally damaging activities. They also improve social equity and raise revenue. 

Question

A policymaker claims that tax cuts led the economy out of a recession. Can we use the AD/AS diagram to show this?

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 with 1 images

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

The graph below shows the AD-AS diagram for the US. How big is the inflationary gap?
Policymakers who can influence AD cannot offset the adverse effects of a recession due to a fall in AS’. Do you agree with this statement? Explain the answer in words and using an AD-AS diagram
Create a graph that shows where Mexico currently is on the business cycle. Be sure to include an AD-AS Model graph that shows if the economy is currently experiencing a recessionary gap, expansionary gap, or long run equilibrium.
Using the AD-AS model, which of the following statement better describe what has happened with the pandemic? a. The government discouraged people from engaging in economic activities, which shifted the AD curve left; meanwhile, the government forced the closure of most of the firms in the economy, which shifted the short-run AS curve left, leading to much lower production in the overall economy. b. The government discouraged people from engaging in economic activities, which shifted the AD curve left; meanwhile, the government forced the closure of most of the firms in the economy, which shifted the short-run AS curve left, leading to a lower natural rate of output in the overall economy. c. The government discouraged people from participating in economic activities, which shifted the AD curve right, causing a higher price level for the firm to produce more goods and services. Hence, the short-run aggregate supply shifts to the left, leading to much lower…
Recent economic reports forecast an increase in the interest rate, which likely increases households' desire to save more and decreases business willingness to invest. Use the AD/AD model to show the effects of an increase in the interest rate on the equilibrium Real GDP and Price index?
What is macro_economics
Using AD-AS diagram show how the change in productivity in the Ghanaian economy in 2017 affected the Real GDP and prices
Where does GDP fit into an AD/AS model?
Define what economists mean when they use the word: “recession”?
Explain by using the AD- AS diagram how in absence of any government intervention the economy may correct itself in the long run. ALso if suppose the government decides to intervene to steer the economy in the right direction. What kinds of policies would the government possibly take? Please show the impact of such policies on the economy using the AD-AS diagram.
Hayek says that markets will heal themselves and that government should not intervene. How does the AD-AS model reflect Hayeks idea that governments cannot increase real GDP beyond the level that the free market economy is able to produce?
Using a standard SAS/ AD model, show how recent decreases in world oil prices will likely impact the US economy. Please provide an explaination for the graph.