The economy of Eastlandia in 2021: . C=2870+ 0.5YD P = 1360 T = TR = G = NX = 0 . The equilibrium real GDP in 2021 is $ Do not enter the $ sign. Round to 2 decimal places if required.
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- Keynesian economics predicts that if government policy makers deem current equilibrium real Gross Domestic Product (GDP) to be "too low," then an appropriate policy action would be to do nothing, because the economy is self-adjusting. raise government spending, thereby increasing aggregate demand and pushing up real Gross Domestic Product (GDP) with little or no inflationary consequences. increase taxes, thereby causing aggregate demand to increase and inducing a rise in real Gross Domestic Product (GDP) with little or no inflationary consequences. reduce the money stock, thereby causing aggregate demand to decrease and inducing a rise in fall in the price level that generates an increase in total planned expenditures.The country of Merryville has an unemployment rate that is greater than the natural rate of unemployment. Using a correctly labeled graph of aggregate demand and aggregate supply, show the current equilibrium real gross domestic product, labeled YC, and price level in Merryville, labeled PLC. The president of Merryville is receiving advice from an economic adviser who advises the president to decrease personal income taxes. How would such a decrease in taxes affect aggregate demand? Explain. The government of Merryville increases spending on goods and services by $200 billion, which is financed by borrowing. If the marginal propensity to consume in Merryville is 0.75: Calculate the multiplier What is the maximum possible change in real gross domestic product (GDP) that could result from the $200 billion increase in government spending?The horizontal segment of the Keynesian aggregate supply curve: A.depicts a negative relationship between real GDP and the price level. B.shows that real GDP can increase only by affecting the economy’s price level. C.depicts a positive relationship between real GDP and the price level. D.shows that real GDP can increase without affecting the economy’s price level.
- Which of the following statements about Fiscal Policy is INCORRECT (a) In order to combat inflation, the South African Reserve Bank must apply a contractionary fiscal policy; (b) A contractionary fiscal policy can result in higher levels of unemployment; (c) Expansionary fiscal policy will increase the budget deficit; (d) The application of fiscal policy will have no effect on aggregate supply in the AD‐AS model. If the inflation rate is 6% and Susan receives a 6% increase in income, then, over the year, Susan’s: (a) Real and nominal income both remain unchanged; (b) Real and nominal income both rise; (c) Real income rises but nominal income remains unchanged; (d) Nominal income rises but real income remains unchanged. Given the import function, Z = 300 + 2/3Y, which of the following statements is correct? The marginal propensity to save is 1/3; The induced component is 300; 2/3 is the proportion of any income spent on imports; None of…In the short run, what is the impact on the price level and the level of the real GDP of each of the following changes. Analyze graphically and explain. a) an increase in the amount of government regulation firms are subjected to b) a decrease in the average level of prices in Canada c) a decrease in the level of government spending on education and healthPlease Define Aggregate supply in no more than 3 lines
- There is little doubt that artificial intelligence and automation have changed the economy. Machines are performing manual tasks at a faster and more consistent pace and are becoming better at replacing humans, even in service-oriented jobs, such as customer support. Show the impact of these innovations in production on the economy using an aggregate demand and supply framework.What is the reason behind why the SRAS curve is upward sloping? There are few unutilised resources Higher price level means higher nominal wages Higher price level means higher real wages Lower price level will increase profit Nominal wages and input costs are sticky in the short runAggregate demand (AD) is A,B,C, OR D A total spending, economy-wide, on durable goods and services. B total spending, economy-wide, on domestic goods and services. C equal to C + I + G + (M - X). D total unplanned expenditure.
- Which of the following policies will shift the IS curve to the right a) An increase in the equilibrium level of income y* b) the central bank buys public debt c) an increase in government spending d) All of the choice are correctWhy is the potential GDP line vertical? The potential GDP line is vertical because _______. A. potential GDP is dependent on the price level B. with a constant money wage rate, the real wage rate rises as the price level rises C. potential GDP and the quantity of real GDP supplied are equal at every price level D. potential GDP is independent of the price levelWhich component of spending was the largest contributing factor to the downturn in spending during the double-dip recession 1980 & 1982? Group of answer choices investment net exports consumption government purchases
