Recent economic reports forecast an increase in the interest rate, which likely increases households' desire to save more and decreases business willingness to invest. Use the AD/AD model to show the effects of an increase in the interest rate on the equilibrium Real GDP and Price index?
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Recent economic reports
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- The graph below shows the AD-AS diagram for the US. How big is the inflationary gap?Based on what you know about events in Europe after World War I, why does Keynes say the social and industrial changes on the European continent are “of a different kind altogether” from those in England? Explain.Using the AD-AS model, which of the following statement better describe what has happened with the pandemic? a. The government discouraged people from engaging in economic activities, which shifted the AD curve left; meanwhile, the government forced the closure of most of the firms in the economy, which shifted the short-run AS curve left, leading to much lower production in the overall economy. b. The government discouraged people from engaging in economic activities, which shifted the AD curve left; meanwhile, the government forced the closure of most of the firms in the economy, which shifted the short-run AS curve left, leading to a lower natural rate of output in the overall economy. c. The government discouraged people from participating in economic activities, which shifted the AD curve right, causing a higher price level for the firm to produce more goods and services. Hence, the short-run aggregate supply shifts to the left, leading to much lower…
- Hayek says that markets will heal themselves and that government should not intervene. How does the AD-AS model reflect Hayeks idea that governments cannot increase real GDP beyond the level that the free market economy is able to produce?What is macro_economicsExplain by using the AD- AS diagram how in absence of any government intervention the economy may correct itself in the long run. ALso if suppose the government decides to intervene to steer the economy in the right direction. What kinds of policies would the government possibly take? Please show the impact of such policies on the economy using the AD-AS diagram.
- Will the shift of SRAS to the right tend to make the equilibrium quantity and price level higher or lower? What about a shift of SRAS to the left?What happens when firms and workers underestimate future prices in the economy. On what would happen to actual output as opposed to the expected potential output.Q12 Use the graph below to answer the question If South Africa were to discover a plentiful supply of cheap oil, this would: Select one: A. move the AS curve to the right. B. move the AD curve to the right. C. move the AD curve to the left. D. move the AS curve to the left.
- Hayek says that markets will heal themselves and that government should not intervene. How does the AD-AS model reflect Hayek’s idea that governments cannot increase real GDP beyond the level that the free market economy is able to produce? Do you believe that the Hayek’s classical AD-AS model explain the factors that cause changes (shifts) in AS realistically? Why or why not?Use the AD‐AS model graph to explain how the government can increase economic growth and reduce the rate of unemployment.Using AD-AS diagram show how the change in productivity in the Ghanaian economy in 2017 affected the Real GDP and prices
