Suppose that an economy is currently in its long run equilibrium. Suppose that the government decides to increases government spending. Being concerned about the budget implications, it also raises the income tax rate to maintain a balanced budget. Using the AD- AS model, explain the impact of this policy on the economy in the:
Q: Transactions to reduce downside risk are known as: * a. calls. b. options. c. puts. d. hedges.
A: When the investor is having a bullish view that implies he assumes the market will fall then he is a...
Q: Are Major League Baseball clubs profit-maximizing monopolies? Some observers of this market have con...
A: The measure that depicts the change in quantity being demanded with respect to change in levels of p...
Q: Jack borrowed $10,000 from Mr. Jill on July 11, 2018 and promised to pay it by December 21, 2018. Ho...
A: Given the borrowed amount = $10000 Interest rate = 15% Total number of days between the given months...
Q: The table below gives a firm's costs. Output Fixed costs ($) Total costs ($) $80 $50 1 $80 $55 2 $80...
A: PRODUCTION cost is the incurred monetary value to produce the goods on factor of production . It is ...
Q: Explain How the market demand curve for a 'normal' good will shift (i.e. left,right or no shift) in ...
A: In economics and consumer theory, a substitute, or substitutable good, is a product or service that ...
Q: Q,-82 million barrels per day. the pre-ANY simplicity, assume that the supply and demand curves are ...
A: Note : Since you have asked for only 2nd part. But I am doing whole question, it will be easily unde...
Q: Measurement of GDP includes O Stay-at-home labour O Consumption O Environmental damage Free time
A: When talking about GDP, it is the measure of income of a country at a specific point of time, such t...
Q: Suppose the Following information was published by Australia Bureau of Statistics in 2017: Item A...
A: Meaning of Gross Domestic Product (GDP): The term gross domestic product refers to the situation u...
Q: Compared with doctors who are paid on a fee-for-service basis by health insurers, doctors who are pa...
A: In the healthcare system, fee-for-service refers to the payment method in which physicians get a fix...
Q: In your own words, explain the concept of the “invisible hand” as it relates to economic theory. Why...
A: In this ,the entrepreneurs are the self interested individuals who are interested in making certain ...
Q: (a) The Consumer Price Index (CPI) in December 1980 was 86.3. The Consumer Price Index as of Decembe...
A: a. If minimum wage in 1980 was w1980, minimum wage in 2021 will be w2021=w1980*278.886.3≈3.23w1980 b...
Q: This means that money is something which can be kept for long periods without deterioration or wasta...
A: In economics, money is defined as a commodity which generally and widely accepted as a medium of exc...
Q: In marginal analysis, if possible, the optimal outcome is found when Select the correct answer below...
A: MB, marginal benefit is the additional benefit gained from selling an additional unit of output. MC,...
Q: Suppose that a consumer cannot vary hours of work as he or she chooses. In particular, he or she mus...
A: In a perfectly competitive market, one of the determinants of the equilibrium wage and quantity of l...
Q: sitier the production model studied in Chapter 4. Final output in the economy is pro- duced using ca...
A: The perfectly competitive markets display the following features are: That there is a rather large ...
Q: If a family spends its entire budget in a given time frame, the family can afford either 10 restaura...
A: Opportunity cost refers to the loss of best alternative while making a decision.
Q: The figure below shows a consumer maximizing utility at two different prices (the left panel) and th...
A: From the utility maximizing point A : Consumption of x = 24 Consumption of y = 48 From Graph 2 : A...
Q: The figure below represents the short-run curves for TK Ltd, a popular Chinese cuisine restaurant. A...
A: The above question is related to the concept of market structure. There are primarily two types of m...
Q: A business has found that it can sell 740 items if it sets its price to $62.23. However, if it lower...
A: Given Demand function in part a p(x)=188.03-22.1130x ... (1) Cost function: C(x)=6.23x+3250 ...
Q: C = 800 + 0.8Y I = 1200 XN = 500 - 0.2Y G = 2000
A: Aggregate Expenditure: It is a model that explains the relation between the components of spending o...
Q: he graph shows befire-tax, where the equilibrium is at 25. When the government levies the tax of 3...
A:
Q: Required information MPC = 0.9; MPM = 0.2 Refer to the above information to answer this question. W...
A: The marginal propensity to earn, (MPE), is a difference between MPC and MPM
Q: The economy below has a linear production possibility frontier, given by C=Y-G/q. The government has...
A: Since public good is inferior, its quantity demanded goes down if it becomes cheaper. Here because o...
Q: In Altus, income rose by $80 billion over the past year. During the same period, its aggregate expen...
A: Here we calculate the MPE , MLR and multiplier by using the given information , so the calculation o...
Q: 7. Effect of a tax on buyers and sellers Part 2 The following graph shows the daily market for wine....
A: The dynamics of demand and supply determine the equilibrium price and quantity in a free market, but...
Q: The production function expressed in the table below represents the amount of hot dogs Hot Dog on a ...
A: Marginal product refers to change in total product or output by adding one more unit of input.
Q: Apply the gravity model to India and China. Why has it taken so long for India and China to become s...
A: 1. Between 2014-15 and 2019-20, India's economic relationship with China has been characterised by t...
Q: Below is Econbank's balance sheet. Assets Liabilities and Owners' Equity Reserves $100 Deposits $800...
A: please find the answer below.
Q: GDP per capita tells us Mean income per person O Income distribution per person Wealth distribution ...
A: Gross domestic product is defined as the value of all the finished goods and services produced in an...
Q: Question 4.3 (a) A monopolist faces the demand curve: Q = 1000 – 20P. What is the exact value of the...
A:
Q: Suppose favorable weather provides increases apple production. As a result, consumer surplus in the ...
A: Hi! Thank you for the question, as per the honour code, we are allowed to answer three sub-parts at ...
Q: The New York Times has stated that Mylan, the company that makes the now infamous Epipen, has become...
A: A patent is a sort of intellectual property that grants its possessor the legal right to prevent som...
Q: Certainty Utility в 200 198 F 194 D' Total utility 170 of wealth Expected Utility A 140 10,000 15,00...
A: Above question do not defines the utility function but as the graph is of a risk averse investor we ...
Q: The fraction of z-scores that fall within z = ±1.60 is ________. a 0.8904 b 0.8729 c...
A: The answer is a. 0.8904. Fraction of values under -1.60 is .0548 Fraction of values under 1.60 is .9...
Q: In the graph, which price would allow for a binding price ceiling? P. 16 12 5. D 20 40 60 O $5 O $8 ...
A: Binding price ceiling is the upper limit on the price which is lower than the market equilibrium pr...
Q: It says that urban environment is complex? Why?
A: Rapid urbanization being combined with improvement in living standards is, in turn, stretching resou...
Q: Compute the slope of the demand curve. The potential answers are: A: -12.89 B: -10.5 C: -11.33 D: -1...
A: volume price $ Total cost 10 1434 22841 30 991 26408 35 917 23781 45 1020 ...
Q: mortgage where the unpaid balance is refinanced every few years at the current rate, whatever that r...
A: A mortgage is an understanding among you and a moneylender that gives the bank the option to take yo...
Q: In Econland, the monetary base is $1,000. People hold one-third of their money in the form of curren...
A: please find the answer below.
Q: A concrete pavement on a street would cost $10,000 and would last for 5 years with negligible repair...
A:
Q: (ii) Suppose Country B is similar to Country A in the amount of government expenditures and the leve...
A: There two points to note about the tax revenue of country B : 1 .) Tax revenue balances the budget a...
Q: a.) what does unemployment mean economically and explain the types of Unemployment? b.) Explain Zer...
A: In economics, unemployment is one of the important concepts to study by the people as it affects the...
Q: The price/demand function of a company is p= 42 – 0.001D and the cost function is 30D + 1200. Determ...
A: We know that at equilibrium level demand and supply for goods and services are equal at certain pric...
Q: 4. Assume that the PF for wine is: Qwine = T0.5 * log(Lwine) and for laptops is: Qiaptop log(K) * lo...
A: Question4: opportunity cost: dQwinedLwinedQlaptopdLLaptp = T0.5Lwinelog(K)Llaptop = T0.5* LlaptopL...
Q: many people keep their savings in the piggy banks, it does not help the financial system to function...
A: Banks and other financial institutions give amazing chances to saving and contributing by people, wh...
Q: 2. High population densities in central cities primarily reflect . . . A. The poor live near the cen...
A: High population density refers to the situation when a large number of people live in a relatively s...
Q: 3.) Find the cash price of a generator which was bought in installment basis that requires a down pa...
A: Note : You have posted multiple questions. As per the Bartleby guidelines, we are allowed to answer ...
Q: state of nature combination: States of Nature Weather related cost per hour Alternatives Cold cost/d...
A: the expected value of perfect information (EVPI) is the price that one would be willing to pay in or...
Q: Restrictions on imports may not include tariffs. O True O False
A: Imports refers to purchase of goods that are produced in foreign countries by domestic residents of ...
Q: 12. Margarette Tire shop simulated the following data below. How much is his expected daily demand? ...
A: Expected daily demand refers to Expected value of demand on daily basis. It includes the summation o...
Step by step
Solved in 2 steps with 1 images
- In the AD/AS model, what prevents the economy from achieving equilibrium at potential output?Congratulationst You have been appointed an economic policy adviser to the United States, You are told that the economy is significantly abowe futtemplyoment GDP. Based on this inlormation, how can the economy would adjust to reach LR.SR Equilbrium (Classical View)? The economy wilt experience low unemployment rate, pushing wages up, and increasing the pelces of a key input (labor). shatting the sAS to the left (up). The economy will experience high unemployment rate, pushing wages down, and reducing the prices of a key input (labor). shiting the SAS to the right (down). The econoriny wil experience low unemployment rate, decreasing inceme, which will eventually shift the AD to the left. The eooncmy will experience low unemployment rate, pushing wages up, and increasing the prices of a key input (labor), shiting the sAs to the night (down).Consider a keynesian macromodel Y=(C0+G+I) / (1-c) where C0 is autonomus consumption, G is government consumption expenditure, I is investment expenditure, c is the marginal propensity to consume. In this model, if lthere is an increse in both labor productivity and the marginal propensity to consume while autonomus expenditures remain unchanged, what will happen to the level of employment? a. can't say for sure b. decreses c. stays the same d. increases
- 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.Considering the growing potential threat of terrorists’ attacks worldwide, the President of an economyapproved a fiscal spending of $24 billion to upgrade its national defense. a. Starting in a long-run equilibrium, draw a well-labelled AD-SRAS-LRAS diagram for the economy. b. Use the same diagram in part (a) to show the SR effect on the economy’s GDP (Y), the price level, andunemployment when the federal government increases its spending on national defense. c. To stabilize the price level and the economy’s GDP, what kind of monetary policy should the economyadopt? Illustrate your answer in the same diagram in (a).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?Assume that an economy is initially operating at the natural rate of output (full employmentoutput). Use the AD-AS model to illustrate graphically the effects on price and output of anincrease in government spending. Explain your assumptions with respect to the range ofaggregate supply of your analysis.Assume that the marginal propensity to consume is 0.75 and that taxes are exogenous. Imagine that government expenditure increases by $10m. Begin by assuming that the interest rate and prices stay fixed. 1. What is the value of the aggregate expenditure multiplier (k)? 2. How would the change be represented in an AD-AS diagram? 3. How would the change differ if the interest rate could change (assuming prices remain fixed)? 4. How would the change differ if the price level could also change?