Which of the following best describes policy makers implementing a Hawk Policy? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a responding to a negative aggregate supply shock by selling bonds b responding to a negative aggregate supply shock by buying bonds с responding to a negative aggregate demand shock by selling bonds d responding to a negative aggregate demand shock by buying bonds

Which of the following best describes policy makers implementing a Hawk Policy? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a responding to a negative aggregate supply shock by selling bonds b responding to a negative aggregate supply shock by buying bonds с responding to a negative aggregate demand shock by selling bonds d responding to a negative aggregate demand shock by buying bonds

Macroeconomics

13th Edition

ISBN:9781337617390

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter16: Expectations Theory And The Economy

Section: Chapter Questions

Problem 1WNG

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Question Two Policy makers can respond to shocks in two possible ways i.e. no policy response and policy stabilisation of economic activity and inflation. Use the AS- AD framework to demonstrate how aggregate output and inflation would perform following an aggregate demand shock accompanied by monetary policy stabilisation measures Show how the outputs above would differ in case of a permanent shock on supply using the AD-AS framework. Discuss the adage that inflation is always and everywhere a monetary phenomenon. What are some of the practical limitations of this assertion
Explain the role of expectations in a dynamic aggregate demand - dynamic aggregate supply (DAD-DAS) model
In each scenario, explain your answers and identify what happened to the price level and aggregate output. (a) Scenario 1: The economy initially in the long run equilibrium at point A, and cost shock causes cost-pushed inflation. The government reacts by implementing expansionary fiscal policy. (b) Scenario 2: The economy initially in the long run equilibrium at point A, and an increase in government purchases causes demand-pull inflation. In the long run, wages respond to the inflation. (c) Scenario 3: The economy initially in the long run equilibrium at point C, and the federal government implements an increase in corporate income taxes and personal income taxes. In the long run, firms and workers adjust to the new price level and costs adjust accordingly.
Aggregate demand shifts left if a. government purchases decrease and shifts left if stock prices rise. b. government purchases increase and shifts left if stock prices fall. c. government purchases increase and shifts left if stock prices rise. d. government purchases decrease and shifts left is stock prices fall.
A severe negative supply shock occurs when there is a significant reduction in the supply of key inputs, such as labor, raw materials, or energy. This can lead to a reduction in output, higher prices, and potentially stagflation (i.e., high inflation and low economic growth). To tackle the effects of a severe negative supply shock, governments and central banks may use various macroeconomic policies. Supply-side policies: Supply-side policies refer to measures aimed at increasing the productive capacity of the economy. In the case of a severe negative supply shock, the government may implement supply-side policies such as tax incentives or subsidies to encourage firms to invest in new technology or production methods. However, these policies may take time to have an impact and may not be sufficient to offset the immediate effects of the supply shock. explain this graphically please.
Assume our complete 4-panel model of the economy in equilibrium at Y-full employment. If the Fed buys up government securities from the public, macroeconomists predict which one of the following? Group of answer choices a)In the long run there will be some inflation and aggregate output will eventually return to its full employment level. b)The short run aggregate demand curve shifts to the left and the short run aggregate supply curve shifts to the right. c)In the long run there will be some inflation and aggregate output will be permanently pushed above Y-full employment. d)The short run aggregate demand curve shifts to the right and the short run aggregate supply curve shifts to the right.
If most shocks to the economy are ________ shocks, then ________. A) aggregate demand; inflation stabilization policy will also stabilize activity in the short-run B) permanent aggregate supply; inflation stabilization policy will also stabilize activity in the short-run C) temporary aggregate supply; inflation stabilization policy has no impact on economic activity in the long-run D) all of the above E) none of the above
Assume the Country C’s economy is in recession: Country C implements a combination of expansionary fiscal and monetary policy. In the absence of complete crowding out what will be the effect on Aggregate demand, price level and interest rates in country C.
“Policymakers would never respond by stabilizing output in response to a temporary positive supply shock.”Is this statement true, false, or uncertain? Explain youranswer
Illustrate graphically what would happen in the short run and in the long run to the price level and Real GDP if individuals hold rational expectations, prices and wages are flexible, and individuals overestimate the rise in aggregate demand (bias upward).
economic forecasters had expected consumer spending to increase by 6 percent this year, but instead it increases by only 1 percent, this situation would be an example of a Group of answer choices negative demand shock positive demand shock negative supply shock positive supply shock
Question 1 (a) Consider an AD-AS model with Static Expectations. Show how changes in monetary policy generate short-run movements in output. (b) Consider an AD-AS model with Rational Expectations. Show how changes in the unanticipated component of monetary policy generate short-run movements in output. (c) Explain how overlapping wage contracts generate persistence in output when there are monetary policy shocks.