PRINCIPLES OF MACROECONOMICS(LOOSELEAF)
7th Edition
ISBN: 9781260110920
Author: Frank
Publisher: MCG
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Question
Chapter 15, Problem 9P
To determine
The calculation of autonomous expenditure and equilibrium output in the short run and graphical representation of AD curve.
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Students have asked these similar questions
According to modern Keynesian theory, an increase in the money supply will
reduce interest rates and increase aggregate demand without unintended consequences.
reduce interest rates and decrease aggregate demand without unintended consequences.
increase interest rates and increase aggregate demand without unintended consequences.
increase interest rates and decrease aggregate demand without unintended consequences.
Complete the following table to compare the results of an unanticipated expansionary policy to those of an anticipated expansionary policy in the short run and long run. Determine whether, in the short run, the level of output increases, decreases, or remains unchanged relative to the potential output level when the expansionary policy is anticipated versus unanticipated. Additionally, determine whether, in the long run, the actual price level is above, below, or the same as initial expectations under both scenarios, and, again, determine whether the level of output increases, decreases, or remains unchanged.
Anticipated Expansionary Policy
Unanticipated Expansionary Policy
Short-Run Change in Output
Decrease/Increase*
Decrease/Increase/No Change*
Long-Run Change in Price Level
Same as Initial expectation/Higher then initial expectations/ lower then initial expectations*
(same options as box on the left) **
Long-Run Change in Output
Decrease/Increase/No change*…
Consider the AD/AS model with a constant inflation rate. It is possible that the money supply is rising while interest rates are unchanged because...
a.
Declining interest rates cause the investment demand curve to shift to the left, which causes interest rates to rise back to their original level.
b.
The rising price level increases money demand, offsetting the impact of the rising money supply.
c.
The rising price level decreases money demand which pushes up interest rates.
d.
Declining interest rates cause the investment demand curve to shift to the right, which causes interest rates to rise back to their original leve.
e.
The money transmission mechanism does not apply in a situation of sustained inflation.
Chapter 15 Solutions
PRINCIPLES OF MACROECONOMICS(LOOSELEAF)
Ch. 15.A - Prob. 15A.1CCCh. 15 - Prob. 1RQCh. 15 - Prob. 2RQCh. 15 - Prob. 3RQCh. 15 - Prob. 4RQCh. 15 - Prob. 5RQCh. 15 - Prob. 6RQCh. 15 - Prob. 7RQCh. 15 - Why, in the absence of public beliefs that the...Ch. 15 - Prob. 9RQ
Ch. 15 - Prob. 10RQCh. 15 - Prob. 1PCh. 15 - For the economy in Problem 1, suppose that...Ch. 15 - Prob. 3PCh. 15 - Prob. 4PCh. 15 - For each of the following, use an AD-AS diagram to...Ch. 15 - Prob. 6PCh. 15 - Suppose that a permanent increase in oil prices...Ch. 15 - An economy is initially in recession. Using the...Ch. 15 - Prob. 9PCh. 15 - Prob. 10PCh. 15 - Prob. 11PCh. 15 - Prob. 15.1CCCh. 15 - Prob. 15.2CCCh. 15 - Prob. 15.3CCCh. 15 - Prob. 15.4CCCh. 15 - Prob. 15.5CCCh. 15 - Prob. 15.6CCCh. 15 - Prob. 15.7CCCh. 15 - Prob. 15.8CCCh. 15 - Prob. 15.9CCCh. 15 - Prob. 15.10CC
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