Assume that the economy begins in long run equilibrium and the central bank increases the target interest rate. In the short run, what happens to the level of GDP? Group of answer choices (A) It stays the same (B) It goes up (C) It goes down
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- (21) Assume that the economy begins in long run equilibrium and the central bank increases the target interest rate. In the long run, what happens to the level of GDP? Group of answer choices (A) It goes down (B) It goes up (C) It stays the sameAssume that the macro-economy is initially in short -run equilibrium. What happens to the equilibrium price level and equilibrium level of real GDP if interest rates in the economy fall? Question 4 options: a) Both the equilibrium price level and the equilibrium level of real GDP decrease. b) The equilibrium price level increases and the equilibrium level of real GDP decreases. c) Both the equilibrium price level and the equilibrium level of real GDP increase. d) The equilbrium price level falls and the equilibrium level of real GDP increases.Question:- 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%.d) Impact on GDP when, Interest rates have come down in the countrye) Impact on balance of payment, when there is a huge demand of vaccines produced in India in South Africa.f) Inflation rate in India reaches negative 2% (-2%)g) The aggregate demand falls short of aggregate supply in the economy
- On a microeconomic demand curve, a decrease in price causes an increase in quantity demanded because the product in question is now relatively less expensive than substitute products. Explain why aggregate demand does not increase for the same reason in response to a decrease in the aggregate price level. In other words, what causes total spending to increase if it is not because goods are now cheaper?Suppose the economy is operating at potential GDP when It experiences an increase in export demand. How might the economy increase production of exports to meet this demand, given that the economy is already at full employment?Subject :- Economy Consider a scenario of a closed economy in the short run where price level is fixed. Assume that both taxes and money supply increase in a way that keep output constant in equilibrium (suppose that the marginal propensity to consume is less than one). Which of the following may result from the policy change? a) It will lead to an increase in investment but a decrease in consumption. b) It will result in an increase in investment but a decrease in government spending. c) It will lead to an increase in investment and private saving. d) It will decrease investment but increase in public saving
- 7. Assume that the economy is initially operating at the natural level of output. An increase in consumer confidence will cause. A) a reduction in the real wage in the medium run. B) an increase in the real wage in the medium run. C) no change in the real wage in the medium run. D) ambiguous effects on the real wage in the medium run. E) none of the aboveTotal Output Planned Aggregate Expenditures (Two-Sector Economy)(Real GDP in billion dollars) (in billions) 5,000 5,250 5,500 5,500 6,000 5,750 6,500 6,000 7,000 6,250 a) If the current output rate is $5.0 trillion, what will tend to happen to business…D6) Finance With the economy in equilibrium, how are 1. firms’ total output (RGDP), 2. expenditures (C + I + G + NE), and 3. household income (wages, return on capital, rent, and profit) related?
- Assume that the macro-economy is initially in short -run equilibrium. What happens to the equilibrium price level and equilibrium level of real GDP if households believe the economy is heading into a recession? Question 11 options: a) Both the equilibrium price level and the equilibrium level of real GDP increase. b) The equilibrium price level increases and the equilibrium level of real GDP decreases. c) Both the equilibrium price level and the equilibrium level of real GDP decrease. d) The equilibrium price level falls and the quilbrium level of real GDP increases.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%.Question 3 on Topics 6 & 7 COVID-19 has sent the economy of Classica into recession. The finance ministry has advised the government to lower stamp duty and other purchase service charges for those wanting to buy existing houses in order to boost economic growth. As well, the finance ministry wants the government to also cut company taxes as this will lead to firms increasing their level of investment in the economy. The President of Classica has asked you, as her chief economic advisor, for your views. In particular, she wishes to know the following: Would a cut in stamp duty and other purchase charges on the purchase of existing houses really boost the economy? Your advise on this is ____________________ (provide your answer and justification on both the immediate and future impact. Feel free to use external resources to assist you in your answer if you prefer). Is the claim that lower company taxes adding to…