Explain the sticky wage and sticky-price theory. Explain the concept of the spending multiplier. Explain why increased government spending of, for example, $15 billion, will have a different impact on aggregate demand than a $15 billion tax cut. Explain the concept of purchasing power parity.

Q: As a result of an economic policy change, interest rates and consumption rise but investment falls.…

A: Fiscal and monetary policies are two main tools to correct the economic imbalances . Where expansion…

Q: Other things being equal, a decrease in the money supply will: A. decrease both investment spending…

A: Money supply is defined as the amount of money that is available with public for the purpose of…

Q: Consider the IS-LM Investment and savings Liquidity and money preference model to represent the…

A: To protect people and firms along with sustaining the economy, the government adopts expansionary…

Q: Macroland implements a combination of expansionary fiscal and monetary policies. What will be the…

A: Fiscal Policy refers to the policy used by the central government to control the money supply in the…

Q: How does Stephanie Kelton’s explanation of Modern Monetary Theory4 (MMT) affect someone's view of…

A: Modern Monetary Theory is a revisionist economic and financial structure that indicates that…

Q: Assume the fiscal authority reduces taxes and, at the same time, the central bank engages in a…

A: Fiscal policy: fiscal policy refers to the policy used by the government to regulate money supply in…

Q: _________________ implements fiscal policy and _______________ implements monetary policy (what…

A: Fiscal and monetary policy are the two economic policy used to make desired changes in the economy…

Q: There is a liquidity trap in the i-M space graph. Show what this means in the i-M graph and then…

A: In Keynesian economies, a liquidity trap is defined as a situation in which the interest rate…

Q: The Reserve Bank faces pressure to begin tightening monetary policy as the cost of living continues…

A: In the IS-LM model, IS refers to Investment saving curve and LM refers to Liquidity of money curve.

Q: the advantages and disadvantages of a weak dollar bill (3 of each)

A: a weak dollar implies that a U.S. dollar can be traded for more modest measures of unfamiliar cash.…

Q: How does Stephanie Kelton’s explanation of Modern Monetary Theory4 (MMT) affect your view of…

A: Government spending: Government expenditure is the amount of money spent by the government on…

Q: If the federal government runs large deficits it could cause crowding out through interest rates.…

A: At the point when the economy is working close to limit, government acquiring to fund an expansion…

Q: Q.1.18 The implementation lag is for monetary policy and , for fiscal policy. (1) Extremely short;…

A: "Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: You are advising the Bank of Canada and the Federal Government. The economy is in a state of…

A: The monetary policies are those policies which are enacted by the central bank of a country to…

Q: B)  Higher price level will increase the real value of many financial assets and therefore cause an…

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Q: Suppose the world real interest rate r ∗ = 3, inflation expectation π e = 2, money supply is 1000,…

A: LM curve shows the points of i and Y that yield equilibrium in money market. It is a positively…

Q: Expansionary monetary policy and contractionary fiscal policy has a combined effect which is…

A: "In macro-economics, the monetary policy is the actions taken by the central bank of an economy to…

Q: Explain how the RBA sets a target cash rate to conduct expansionary monetary policy to move an…

A: The cash rate is also referred to as a monetary instrument. In Australia the interest rate is called…

Q: The idea that higher prices reduce the purchasing power of financial assets and lead to less…

A: The purchasing power refers to the value of a currency expressed in terms of the amount that one…

Q: To fix a negative supply shock in an economy, ___________should be used.   a.  contractionary…

A: The economies around the globe are focused on maximizing the level of their growth, and development.…

Q: ssume that the government is implementing an expansionary fiscal policy and as a result has…

A: Fiscal policy refers to the use of taxation and expenditure by the government to impact the economy.…

Q: Respond to the following in a minimum of 175 words:  Explain the chain of events that occurs for…

A: Monetary policy refers to the central bank policies that directly influence the quantity of money…

Q: Explain and discuss contactionary fiscal policy and contactionary monetary policy with IS-LM graphs…

A: The IS curve shows the negative relationship between interest rate and real GDP where goods market…

Q: Explain the effect of expansionary monetary policy (increase in money supply) using IS-LM Model.

A: We will answer the first question since the exact one was not specified. Please submit a new…

Q: The ________ demand for money arises out of the need to hold money as a medium of exchange. This…

A: Peoples desire to hold money mainly for transactional purposes. This is to carry out day to day…

Q: Explain what kind of fiscal policy and what kind of monetary policy are likely to reduce GDP.

A: Fiscal policy: - it is a tool of the government of a country in which the government adjusts its…

Q: Read the following excerpt. Identify whether the policy action is fiscal or monetary and…

A: The fiscal policy is used by the central government of the country for regulating the income of the…

Q: When the demand for money as a medium of exchange is high, the impact of fiscal policy on aggregate…

A: In economics, crowding out is a peculiarity that happens when expanded government association in an…

Q: Macroeconomics. True/False Questions. Please answer all questions and give brief explanation. The…

A: (Since you have asked many questions, we will solve the first one for you. If you want any specific…

Q: Explain the difference between fiscal policy and monetary policy. Explain also 2 advantages and 2…

A: Macroeconomics is a branch of economics which studies the economy as a whole while considering…

Q: In the most recent FOMC meeting, the Federal Reserve increased the Federal Funds rate. By doing…

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Q: The economy is experiencing negative GDP growth and high unemployment.  Which fiscal policy action…

A: Meaning of Fiscal Policy: The term fiscal policy refers to the situation under which the…

Q: Describe what will happen to the interest rate and output with the implementation of following…

A: Macroeconomics is a part of economics that deals with production, decision and allocation concerning…

Q: Explain the monetary policy and fiscal policy and the differences between them. Comment on the…

A: The monetary and fiscal policies are discretionary policies used by the authorities in a country to…

Q: An economy is operating with output $400 billion above its natural level, and fiscal policymakers…

A: Expansionary gap is the gap when the output increases above its natural rate.If the government needs…

Q: An appropriate fiscal policy response to a recession would be to decrease which of these?…

A: Recession: When there is a recession in the economy, the money supply gets reduced which leads to a…

Q: Read the following excerpts. Identify whether the policy action is fiscal or monetary and…

A: Hi, thanks for the question. Since there are multiple subparts, we will answer for the first three…

Q: econ

A: Fiscal policy is the use of tax policies and government spending in order to influence conditions of…

Q: the idea that higher prices reduce the purchase and power of financial assets and lead to less…

A: When prices increase ie there is inflation, the purchasing power of people reduces. They need to pay…

Q: explain the chain of events that occurs for expansionary and contractionary monetary policy to…

A: Monetary policies are generally used to make short-run stability in the economy, but it has a…

Q: If the Fed overcorrects the economy during a period of decreased consumer spending...... )…

A: Recession  A considerable decrease in overall economic activity in a particular area is referred to…