Assume that the AD curve intersects the AS curve in the Neoclassical Region and that the government increases government spending. What happens to the price level? Group of answer choices (A) It stays the same. (B) It goes down. (C) It goes up.

Assume that the AD curve intersects the AS curve in the Neoclassical Region and that the government increases government spending. What happens to the price level? Group of answer choices (A) It stays the same. (B) It goes down. (C) It goes up.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter24: The Aggregate Demand/aggregate Supply Model

Section: Chapter Questions

Problem 39RQ: What is the neoclassical zone of the SRAS curve? How much is the output level likely to change in...

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Concept explainers

Welfare Analysis

Welfare analysis of the society is related to welfare economics. From the economic point of view former welfare economics refers to that subject which uses the techniques of microeconomics to analyse and evaluate the welfare at the economic or aggregate level.

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Assume that the AD curve intersects the AS curve in the Neoclassical Region and that the government increases government spending. What happens to the price level?

Group of answer choices

(A) It stays the same.

(B) It goes down.

Defintion Defintion Curve that represents the graphical relationship between the total supply of goods and services and the price level in the economy. When the price level increases, producers tend to supply more of a product in the market to earn a higher revenue or vice versa.

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In the Keynesian framework, which of the following events might cause a recession? Which might cause inflation? Sketch AD/AS diagrams to illustrate your answers. A large Increase In the price of the homes people own. Rapid growth in the economy of a major trading partner. The development of a major new technology offers profitable opportunities for business. The Interest rate rises. The good imported from a major trading partner become much less expensive.
List three practical problems with the Keynesian perspective.
(26) Assume that the AD curve intersects the AS curve in the Neoclassical Region and that the government increases government spending. What happens to the level of unemployment? Group of answer choices (A) It stays the same. (B) It goes up. (C) It goes down.
Imagine that the AD curve intersects the AS curve in the Neoclassical Region and that the price of oil increases dramatically. What happens to the price level? Group of answer choices (A) It stays the same. (B) It goes up. (C) It goes down.
Comment, on the likely outcome with sufficient arguments? a) Impact on aggregate demand of the economy if imports are greater than exports.b) Impact on aggregate demand if the GDP of trading partner is increasing at a faster rate than that of India.c) Inflation rate in the country has reached 6.73%.
Which of the following could cause the US economy to go into a recession? a) a declining stock market and an increase in unemployment b) an increase in pessimism by consumers and businesses c) All of the choices are correct d) a decrease in Aggregate Demand e) None of the choices is correct
Please note that this is a multi part quesition; thank you so much for your time and effort it means so much to me! Figure 1: Hayek’s (Classical) AD-AS Model (Image normally goes here) Part 1: Why does Hayek’s aggregate supply curve always lead to an equilibrium level of national output equal to the full-employment level of real GDP? Part2: Hayek says that markets will heal themselves and that government should not intervene. How does the AD-AS model reflect Hayek’s idea that governments cannot increase real GDP beyond the level that the free market economy is able to produce? Part 3: Do you believe that the Hayek’s classical AD-AS model explain the factors that cause changes (shifts) in AS realistically? Why or why not?
Question 3 Using graphical illustration of AS-AD framework, show the effects of following events on real output and price level in the economy. D) The government raises taxes by $100 billion. E) Government announces an interest rate cut to encourage business investment.
Imagine that the AD curve intersects the AS curve in the Neoclassical Region and that the price of oil increases dramatically. What happens to the level of GDP? Group of answer choices (A) It goes down. (B) It stays the same. (C) It goes up.
Question 3 Using graphical illustration of AS-AD framework, show the effects of following events on real output and price level in the economy. A) The government raises taxes by $100 billion. B) Government announces an interest rate cut to encourage business investment.
In the Keynesian framework, for each of the following events which might cause a recession and/or inflation? Explain using Aggregate Demand/ Aggregate Supply. a. A large increase in the price of the homes that people own b. Rapid growth in the economy of a major trading partner c. The development of a major new technology offers profitable opportunities for business d. The interest rate rises e. The good imported from a major trading partner becomes much less expensive.
Please note that I have answers to parts 1 and 2. All I need you to do it help me with part 3. Thank you so much for your time and effort! Figure 1: Hayek’s (Classical) AD-AS Model (Image normally goes here) Part 1: Why does Hayek’s aggregate supply curve always lead to an equilibrium level of national output equal to the full-employment level of real GDP? Part 2: Hayek says that markets will heal themselves and that government should not intervene. How does the AD-AS model reflect Hayek’s idea that governments cannot increase real GDP beyond the level that the free market economy is able to produce? Part 3: Do you believe that the Hayek’s classical AD-AS model explain the factors that cause changes (shifts) in AS realistically? Why or why not?