Determine whether the ad or as curve with shift with each scenarios below. Each situation is independent of each other. 1- a increase in the personal income tax rate. AD or AS 2-an increase in government spending 3-decrease in resource prices 4-decrease in subsidies for businesses 5-decrease in interest rates

Determine whether the ad or as curve with shift with each scenarios below. Each situation is independent of each other. 1- a increase in the personal income tax rate. AD or AS 2-an increase in government spending 3-decrease in resource prices 4-decrease in subsidies for businesses 5-decrease in interest rates

Macroeconomics

13th Edition

ISBN:9781337617390

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter8: Aggregate Demand And Aggregate Supply

Section: Chapter Questions

Problem 3WNG

See similar textbooks

Similar questions

In the 1960s the U.S entered the Vietnam War, and military expenditures (part of government expenditures) grew from an annual rate of $113 billion to 138 billion. The economy was near full-employment and, therefore, given there was no offsetting tax increase, inflation pressures emerged. Assume the MPC is .75 A) How did the increase in military expenditures affect AD? B) If in 1968 the AD Excess was $150 billion, what change in government expenditures would you have recommended?
Which of the following would NOT cause a shift in AD? Select one: a. A reduction in interest rates b. A fall in the cost of production c. A reduction in income tax d. An increase in government spending
"Tax cuts are more effective in generating the economy when the economy is in recession compared to at full employment." True or False? Show and explain your answer based on the AD-AS model.
Suppose that in 2008, Sanaton’s government increases taxes. Show how this event will change equilibrium output and price level by shifting either the SRAS or AD curve, and then answer the questions below. Did equilibrium output increase or decrease?Increase/Decrease Did equilibrium price increase or decrease?Increase/Decrease
State what economic policies (fiscal AND monetary) should be enacted to stabilize the economy. Clearly state your reasons for choosing these policies. What the results of these economic policies look like in the short-run and long-run. In this section, include an AD-AS Model graph that shows the results of your recommended economic policies.
Assume the following to answer the following questions: C= 1000+ .9 (Y-T) Tax rate = 0.1Y Imports = 0.1(Y-T) Government spending = 200 Investment = 300 Exports = 600 Potential Output = $8000 The economy described above is in the ["recessionary", "inflationary"] gap of the AD/AS Model.
In an effort to boost output, the government passes a large fiscal stimulus that raises government spending by $1 trillion. Use the AD-AS framework to predict how prices and output change in the very short run, in the short run, in the medium run, and in the long run.
Assume the economy begins with potential real GDP = $13.7 trillion, while actual real GDP = $14 trillion and the Price Level (GDP Deflator) = 210 in the AD/AS model. A year later the Price Level = 212 and actual real GDP = $14.1. Based on their relative effects on the AD/AS model, which of the following scenarios best explains this new outcome? The effect of a(n) Group of answer choices: increase in consumer spending is MORE than the effect of a decrease in natural gas prices. increase in wages is LESS than the effect of an increase in consumption taxes. decrease in physical capital is LESS than the effect of a decrease in oil prices. increase in oil prices is MORE than the effect of negative business expectations.
Several factors can cause the SRAS curve to shift; these factors include a change in the cost of inputs, a change in taxes, and even a change in seller expectations. a. True b. False
Suppose the economy is in a recessionary gap. (the economy is not self-regulating and consider upward sloping SRAS) If government spending increases by $30,000 but private investment reduces by $25,000 at the same time, will increase in government purchase lead the economy to long run equilibrium in goods and service market? Why or why not? Explain with AD-AS graph.
Please draw a graph including everything below: Draw a fully labeled AS-AD model (include the AD, SRAS, and LRAS curves) to illustrate a recessionary gap. Label the Price Level (PL1) and GDP (Y1). Then draw a new AD or SRAS curve to illustrate the intended impact the stimulus bills. Label the new Price Level (PL1) and GDP (Y2).
(25) 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.