For each of the following events, draw an AS-AD diagram and explain the short-run effects on output and the price level. Assume that policymakers take no (other) actions. 1. The government increases cooperate tax. 2. Households decide to save a large share of their income. 3. Price of oil increases. At the same time, the government increases spending on military. 4. Price of oil increases. At the same time, the average wage increases in the U.S.
For each of the following events, draw an AS-AD diagram and explain the short-run effects on output and the price level. Assume that policymakers take no (other) actions. 1. The government increases cooperate tax. 2. Households decide to save a large share of their income. 3. Price of oil increases. At the same time, the government increases spending on military. 4. Price of oil increases. At the same time, the average wage increases in the U.S.
Chapter8: Aggregate Demand And Aggregate Supply
Section: Chapter Questions
Problem 3WNG
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For each of the following events, draw an AS-AD diagram and explain the short-run effects on output and the
1. The government increases cooperate tax.
2. Households decide to save a large share of their income.
3. Price of oil increases. At the same time, the government increases spending on military.
4. Price of oil increases. At the same time, the average wage increases in the U.S.
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Step 1: Describe macroeconomic analysis
VIEWStep 2: Examine the scenario when the government increases cooperate tax.
VIEWStep 3: Examine when the households decide to save a large share of their income.
VIEWStep 4: Explain hikes in oil price and government military spending
VIEWStep 5: Explain the hikes in oil price and wages
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