Assume the economy starts at full-employment. There is a global pandemic. Which of the following will happen as a result of the pandemic (only the pandemic): Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a interest rates increase, aggregate expenditures decrease, prices decrease and output decreases b interest rates decrease, aggregate expenditures increase, prices increase and output decreases interest rates do not initially change, aggregate expenditures decrease, prices decrease and output decreases d interest rates do not initially change, aggregate expenditures increase, prices increase and output increases

Assume the economy starts at full-employment. There is a global pandemic. Which of the following will happen as a result of the pandemic (only the pandemic): Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a interest rates increase, aggregate expenditures decrease, prices decrease and output decreases b interest rates decrease, aggregate expenditures increase, prices increase and output decreases interest rates do not initially change, aggregate expenditures decrease, prices decrease and output decreases d interest rates do not initially change, aggregate expenditures increase, prices increase and output increases

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter22: Aggregate Demand And Aggregate Supply

Section: Chapter Questions

Problem 2P

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Use the information in the following table to answer the questions below. Assume you are dealing with short-run aspects of the economy, so the marginal propensity to consume is constant. Also, for simplicity, assume this economy has no taxes. In your answers, expain brifly how did you get the numerical result. Real GDP Consumption PlannedInvestment GovernmentPurchases Net Exports $9,000 $7,800 $1,500 $1,000 -$700 $10,000 $8,600 $1,500 $1,000 -$700 $11,000 $9,400 $1,500 $1,000 -$700 $12,000 $10,200 $1,500 $1,000 -$700 $13,000 $11,000 $1,500 $1,000 -$700 $14,000 $11,800 $1,500 $1,000 -$700 Suppose net export increases by $400 (Assuming MPC, Gevernment Purchases, and Planned Investment are the same). What will be the new equilibrium level of GDP? Consumption?
Use the information in the following table to answer the questions below. Assume you are dealing with short-run aspects of the economy, so the marginal propensity to consume is constant. Also, for simplicity, assume this economy has no taxes. In your answers, expain brifly how did you get the numerical result. Real GDP Consumption PlannedInvestment GovernmentPurchases Net Exports $9,000 $7,800 $1,500 $1,000 -$700 $10,000 $8,600 $1,500 $1,000 -$700 $11,000 $9,400 $1,500 $1,000 -$700 $12,000 $10,200 $1,500 $1,000 -$700 $13,000 $11,000 $1,500 $1,000 -$700 $14,000 $11,800 $1,500 $1,000 -$700 (a) What is the equilibrium level of real GDP in this economy? (b) Compute the marginal propensity to consume. (c) Compute the government expenditures multipler. (d) Suppose net export increases by $400 (Assuming MPC, Gevernment Purchases, and Planned Investment are the same). What will be the new equilibrium level of GDP? Consumption?
Finally, so can you summarize and contrast what you think happened to Agg. Demand during 2020 versus 2021 (better define Agg Demand)? (covid pandemic)
Suppose you are the president of a hypothetical economy. You have to fix healthcare and run the automobile industry . But Swine flu is breaking all over. a) We know that the economy also suffers from sour expectations about future productivity. Represent in a neatly drawn ISLM figure that, all else equal, those expectations, in conjunction with the flu outbreak described in part A above, could result in a decline in GDP and a decline in real interest rates without any change in the price level. b) Why do prices not rise in the scenario described in part A?
You are hired by the Council of Economic Advisors (CEA) as an economic consultant.The chairperson of the CEA tells you that she believes the current unemployment rate istoo high. The unemployment rate can be reduced if aggregate output increases. She wantsto know what policy to pursue to increase aggregate output by 300 billion TL. The bestestimate she has for the MPC is 0.8. Which of the following policies should yourecommend?a) Increase government purchases by 75 billion TL.b) Reduce taxes by 75 billion TL.c) Reduce taxes by 75 billion TL and to increase government purchases by 75 billion TL.d) Reduce the budget deficit by 300 billion TL
Autonomous Spending: $1,000 Invest2, 000 Government Spending: $3, 000 Exports: $500 C1: .55 Tax Rate: .22Marginal Propensity to Import: .09 If Investment drops by 20%, and if the government decides not to spend, whatwould the new tax rate have to change to in order to offset the drop in Y?
Now suppose I (inventories) decreases by $80 billion as a result of a macroeconomic shock. Modify your macroeconomic model to reflect this change ceteris paribus and answer the following questions (questions 21 - 25). - At GDP of 7400 1. Inventories are in surplus by 80 2. Inventories are in shortage by 80 3. Equilibrium is achieved by the macroeconomy according to the Keynesians 4. Inventories are in surplus by 160 - At GDP of 9000 1. Inventories are in surplus by 80 2. Inventories are in shortage by 320 3. Equilibrium is achieved by the macroeconomy according to both the Keynesian and Neoclassical economists 4. Inventories are in surplus by 160 - At GDP of 8200 1. Inventories are in surplus by 80 2. Inventories are in shortage by 320 3. Equilibrium is achieved by the macroeconomy according to both the Keynesian and Neoclassical economists 4. Inventories are in shortage by 4000 - At GDP of 8200 1. Inventories are in surplus by 80 2. Inventories are in shortage by 320 3.…
Suppose an economy is hit by a recession and people’s income fall. a) Show graphically using AD-AS model how the price level and output are affected in the long-run. b) Can the government use fiscal policy to offset the effects on price level and output, explain?
Prompt We have been discussing major macroeconomic concepts like the ADAS Model and Fiscal Policy. This is an opportunity to apply that knowledge to a real-world scenario. Choose one of the following scenarios and identify whether it is an example of a recessionary economy or inflationary economy. Next, analyze possible Neoclassical solutions for it. Then, analyze possible Keynesian solutions for it. What would the impact on the economy be in the short-run? Long-run? Scenario 1: An increase in the unemployment rate to 7.4% has occurred. Inflation has increased causing a decline in consumer spending. Exports have declined by more than $4 billion. This has caused a decrease in GDP by 3.7%. Scenario 2: An increase in consumer and government spending has occurred. This has increased GDP by 4.4%. Currently, inflation rate has increased to 1.6%. Unemployment has remained at 5.5%. Scenario 3: An increase in the stock market by 26.5% has occurred. Companies are stockpiling the earnings…
Assuming there is no trade, if the Marginal Propensity to Consume is 0.90 and the gov increase spend1ng by $5 bil1ion, how much will output rise?
No written by hand solution An economist needs to predict the real wage rate, employment, output, real interest rate, consumption, investment, and price level. The economy is hit with a shock, which the economist thinks is a temporary adverse supply shock. (a) If you were the economist, what would be your forecasts for each of the variables listed above (rise, fall, and no change) in general equilibrium? (b) What if the shock was due to people's reduced expectations about their future income? Which variables did you forecast correctly, and which did you forecast incorrectly in part (a)?