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Using the dynamic AD/AS model, explain why Kennedy is concerned about the state of the global economy.
Step by step
Solved in 2 steps
- In a Keynesian economy, please show and explain how would reducing marginal tax rates affect income and price levels in the name of AD-AS model.In the AD/AS model, what prevents the economy from achieving equilibrium at potential output?question 1: In Figure 1 , how does the AD-AS model reflect the idea that governments cannot increase real GDP beyond an economy’s equilibrium level that the free-market economy is able to produce? Explain your answer.
- Using the dynamic AD/AS model, explain why expert is concerned about the state of the global economy. What difference might it make to the Australian economy if the trading relationship between China and Australia deteriorates as political tensions continue to increase?The Keynesian view of the AD/AS model states that when beginning from potential output equilibrium, any increase in AD will :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?
- Explain the fiscal and monetary policy used in the attached document using IS model and the AD modelUse the AD - AS model in the figure below to answer the following questions. Suppose the economy is currently experiencing an inflationary gap, without any government policy intervention, the economy would move from ◻ a) C to D b) B to A c) C to B d) A to E e) E to A"Tax cuts are more effective in generating the economy when the economy is in recession compared to at full employment." True or False? Show and explain your answer based on the AD-AS model.
- 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?Using the AD/AS model, show how fear of a recession is expected to affect an economy experiencing too much inflationUse the AD-AS model to explain the impact of a general increase in productivity on the general price level and the level of real production and income in the economy
