The Aggregate Demand- Aggregate Supply (AD-AS) model can be used to illustrate that by choosing the right combination of measures (policies) it is possible for the economy to grow without it experiencing inflationary pressures. Discuss four supply-side measures that policy makers can implement to expand the economy without increasing the inflationary pressure in the country? (20

The Aggregate Demand- Aggregate Supply (AD-AS) model can be used to illustrate that by choosing the right combination of measures (policies) it is possible for the economy to grow without it experiencing inflationary pressures. Discuss four supply-side measures that policy makers can implement to expand the economy without increasing the inflationary pressure in the country? (20

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter11: Fiscal Policy

Section: Chapter Questions

Problem 1.8P

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Question 7 The model of aggregate demand and aggregate supply Answer is different from the model of supply and demand for a particular market, in that we cannot focus on the substitution of resources between markets to explain aggregate relationships. is different from the model of supply and demand for a particular market, in that we have to separate real and nominal variables in the aggregate model. is a straightforward extension of the model of supply and demand for a particular market, in which substitution of resources between markets is highlighted. is a straightforward extension of the model of supply and demand for a particular market, in which the interaction between real and nominal variables is highlighted. Question 8 When the price level falls the quantity of Answer consumption goods demanded rises, while the quantity of net exports demanded falls consumption goods demanded and the quantity of net exports demanded both rise. consumption goods demanded and the quantity of…
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21. Assume that we are at the natural rate of GDP, meaning we do not have a recession or an expansion, and then the Central Bank raises interest rates, how can this create a recession (A) our business investments will increase and our exports will decrease (B) our business investments will decrease and our exports will increase C) our business investments will decrease and our exports will decrease (D) our business investments will increase and our imports will increase
The COVID-19 pandemic continues to present new challenges to the Australian economy. The Treasury has announced that they continue to support the economy by adding $41 billion in direct economic support, bringing total support since the beginning of the pandemic to $291 billion as of May 2021. Using a AD-AS graph, illustrate how this support would impact on economic growth and inflation in the short and long term
13 Which of the following would increase aggregate demand? Increase in savings. Increase in taxation. Decrease in consumption spending. Increase in government spending.
Question #4. Individual income taxes directly affect personal disposable incomes which in turn affect the domestic demand for goods and services. Production costs depend substantially on oil prices. Market expectations are: (1) income taxes in the U.S. will decline and (2) oil prices will remain relatively unchanged. Using market expectations, what do you expect the U.S. output and prices next year? Assume we are moving from the old equilibrium to a new equilibrium. Please state clearly your assumptions and include a graph to support your answer.
#2a: As you have learned consumer expectationsLinks to an external site. are a major driver of the short run path of the economy. Consumer spending accounts for about 68% of GDP and consumer sentimentLinks to an external site. is a major factor in shifting Aggregate Demand. Do you expect consumer confidence and business expectations to improve in the months ahead? Utilizing the equation GDP= C+I+G+ (X-M) from Chapter 6 what is your forecast for the way the AD curve will shift between now and the end of 2023? Explain. Do you anticipate a recession between now and the end of 2023?
35- : If aggregate demand increases in an economy while aggregate demand is constant in the short run, which of the following statements is correct for the new equilibrium point? a) price goes up national income goes down B) price goes up national income goes up NS) price goes down national income goes down D) price goes down and national income goes up TO) price goes up national income does not change