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Explain the role of expectations in a dynamic aggregate
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- Explain the role of expectations in the macroeconomy.Explain what types of policies the federal government may have implemented to restore aggregate demand and the potential obstacles policymakers may have encountered.Philotechnia requires every high school graduate to be computer literate because so many workplaces are using different forms of information technologies. How is the aggregate demand–aggregate supply model affected? Demonstrate the effect by shifting the appropriate curve or curves.
- Lucas's critique, based on rational expectations, argues that it is not enough to use econometric models to evaluate policy. In this regard, explain the comparison of the new classical macroeconomic model, the new Keynesian model and the traditional model on the impact of rational expectations on the aggregate economy!Assuming aggregate demand remains constant, supply shocks that cause a leftward shift in the aggregate supply curve will------. Select one: a. decrease prices b. increase real output c. decrease the rate of unemployment d. increase both prices and the rate of unemploymentA period of stagflation is part of the normal aftermath of a period of excessive aggregate demand. True or False
- Assess the validity of the following statement: An increase in government spending, the target inflation rate or the monetary base shifts the aggregate demand curve to the right.Oil price shocks have an evident impact on the short run aggregate supply curve. With the help of a graph demonstrate how rising oil prices affect the SRAS and explain what other factors can cause this shift.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).
- Using the dynamic aggregate demand and aggregate supply model, illustrate and explain the impact of following policy decisions on income, unemployment and inflation in Australia in both short-run and long-run. Part (a) Due to the ongoing Omicron variant induced COVID-19 pandemic, the government is reducing the time gap for taking the booster shot for people inoculated with two doses of COVID-19 vaccine. Part (b) The building and construction industry in Australia is suffering from some logistical issues with imported construction materials as a fallout of the COVID-19 pandemic. The Reserve Bank of Australia (RBA) is closely watching the situation and contemplating a suitable policy action. Explain and illustrate what policy stance should the RBA take and how would that remedy the problem.Could you please also sort the following shocks into positive or negative aggregate supply or aggregate demand shocks? Fear New inventions occur at a faster pace A faster money growth rateWhich of the following events would not involve a supply shock that would shift the aggregate supply curve? (i) The Cosatu union disintegrates and the minimum wage is abolished. (ii) African bank plc’s bad debt creates a financial crisis and that leads to reduction in money supply. (iii) 2016 drought destroys half of the crops farmed. (iv) A tax on sugar is levied on companies that produce sugary beverages. Group of answer choices Only ii and iv are correct. Only ii is correct. Only iii and iv are correct. Only i and ii are correct.