Which of the following shocks has the biggest potential to increase a country's potential GDP? O A natural disaster. O A recession. O A scientific discovery. O A technological advancement. O A spike in inflation from 2% to 4%.
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- INFLATION RATE LRAS AD SRAS REAL GOP GROWTH RATE Suppose a change in fiscal policy causes the AD curve to shift from AD₁ to AD2, as shown above. Which response below would most likely cause that shift? A fall in taxes OR a rise in government spending. A rise in taxes OR a rise in government spending. A rise in taxes OR a fall in government spending. A fall in taxes OR a fall in government spending.In a Keynesian framework, using an AD/AS diagram, which of the following government policy choices offer a possible solution to recession? Which offer a possible solution to Inflation? A tax Increase on consumer income. A surge in military spending. A reduction in (axes for businesses that Increase investment. A major Increase in what the U.S. government spends on healthcare.A country has a social loss of 16.5% and an inflation gap of 1.2%, knowing that for the current government price stability is equally important to the stable growth, please calculate the current output gap and also explain how did you get the value.
- Hi, could you help me solve this problem? It is often argued that the effect of a demand shock depends on the state of the economy. In particular, a given increase in aggregate demand may induce a larger increase in inflation (or price level) if the output gap is initially positive (output exceeds natural output) than if the output gap is initially negative. The argument is that when economy’s overall production capacity is almost fully used, firms cannot expand output much in response to an increase in demand.t Draw AD and AS curves that are consistent with these ideas and explain them briefly.Specific subject - Macroeconomic Analyse the case of a negative supply shock caused by an increase in oil prices and compare with the shock caused by the Covid pandemic. What would be the similarities and differences between the two shocks? What would be the effect of an expansionary economic policy (increase in aggregate demand)? Graph What measures or government intervention would be most appropriate to deal with both types of shocks? Graph Compare the adjustment in both cases with and without government intervention. GraphWhat types of shocks are thought to cause long-run trend growth in real GDP? SRAS LRAS Government Deficit AD
- .SOlVE ONLY HIGHLIGHTED QUESTION Suppose we observe that US economy is experiencing low unemployment (3%), faster-than-average real GDP growth (4%), and increasing inflation (rising from 2% to 4%). a. Draw the AS/AD graph for the kind of shock that would generate these symptoms, and give an example of how that kind of shock might happen. What kind of change in the economy leads to this kind of AS/AD graph? b. Briefly discuss what you see in the graph that corresponds to each of the symptoms. E.g. what part of the picturetells you we have low unemployment? b)Describe the two goals that the Federal Reserve is required to pursue with monetary policy. Given these two goals, what specific actions will the Fed take in reaction to the shock, and how will these affect real GDP in the short run? Be sure to explain how the proposed action helps achieve the Fed's goals.What types of shocks are thought to cause most of the fluctuations that are called business cycles (e.g., fluctuations in GDP)? Question 45 options: Government Deficit AD SRAS LRASGoverment should focus on a- long run growth and controlling deflation b- long run growth and controlling inflation c- shot run gorht and controllling deflation d- short run growth and controlling inflation
- In the quantity theory, inflation does all of the adjusting. Recall that M* + v* = Inflation + real growth. a. Consider the nation of Kydland. Before the shock to Kydland’s economy, M* = 10%, v* = 3%, real growth = 4%. What is inflation? Inflation is %.Does a boom in Y rises above Natural rate of GDP require a price surprise? In which direction?1.21 If real GDP falls from one period to another and the price level stays the same, we can conclude that…a) Nominal GDP increasedb) Inflation decreasedc) Nominal GDP also decreasedd) NDP increased
