Beginning at equilibrium E1 in Exhibit 1, when the government increases spending or cuts taxes the economy will experience:   Group of answer choices an inflationary recession. stagflation. cost-push inflation. demand-pull inflation.

Q: In each scenario, explain your answers and identify what happened to the price level and aggregate…

A: In the economy, a long-run equilibrium is considered as the full-employment level where economy is…

Q: When there is a problem of a delay in terms of implementation of the fiscal policy, that would be…

A: Since you have posted a question with multiple sub-parts, we will solve first three subparts for…

Q: When there is a recession you need __________ fiscal policy. When there is inflation you need…

A: A recession means the economic activities are slowing down and to improve it needs to push the…

Q: Define inflation. Explain why inflation is a macroeconomic concern. Question 2: How can the…

A: Inflation is defined as an overall increase in general price level of a basket of goods and…

Q: Macroland implements a combination of expansionary fiscal and monetary policies. What will be the…

A: Fiscal Policy refers to the policy used by the central government to control the money supply in the…

Q: Automatic stabilizers:     A)  counteract both recessions and expansions through changes in…

A: Automatic stabilizers are part of the government budget that offsets fluctuations in aggregate…

Q: Consider an economy facing a recessionary gap in the short-run.  Expansionary fiscal policy leads to…

A: Prices would be pushed up as a results of an excessive amount of spending. Employment would suffer…

Q: Which of the following would be a fiscal policy prescription for ending inflation? A) Raise taxes…

A: Inflation is the incident when the general price-level(P) of the economy rises over time. The…

Q: Asap   Explain ​the following with the help of aggregate demand and aggregate supply framework…

A: [The aggregate demand and aggregate supply model is initially in equilibrium when aggregate demand…

Q: The US government has recently announced and started to implement a large-scale fiscal expansion to…

A: To boost the economy from the pandemic affect US fiscal stimulus which means using Expansionary…

Q: If consumer confidence falls, then aggregate demand shifts   a. left, raising the inflation rate…

A: Answer to the question is as follows:

Q: When a recessionary gap exists, actual output______ potential output and the rate of inflation will…

A: A recessionary gap, or contractionary gap, happens when a country's genuine GDP is lower than its…

Q: Refer to the setup of 2 questions ago.  An increase in government spending would Group of answer…

A: Government spending is the amount of money spent by the government on purchasing products and…

Q: Inflation does not affect all prices equally.  This ragged inflation causes relative-price…

A: Inflation is the overall increase in the general price level in an economy. It, in a way, represents…

Q: Advocates of fixed policy rules believe that   Discretionary policies can improve macro outcomes.…

A: Fixed policy rule refers to the situation when government officials beleives in some special set of…

Q: If the economy is in long run economic equilibrium, at potential GDP, and full employment has been…

A: Aggregate demand (AD) is the sum total amount of commodities and services demanded in an economy at…

Q: If the marginal propensity to consume is zero, a temporary tax increase leads to a small decrease in…

A: In an economy, if the marginal propensity to consume is zero, it is the situation when an increase…

Q: Label each of the following scenarios in which there are problems enacting and applying fiscal…

A: Fiscal policy can be used by the government in order to stabilize the economy. Primarily in fiscal…

Q: is inflation that results from a decrease in the aggregate supply curve while the aggregate demand…

A: Inflation refers to the general increase in the all over price in an economy.

Q: 3. Automatic stabilizers: Group of answer choices work without the need for decisions from Congress…

A: An automatic stabilizer implies the market forces that act automatically in the market to correct…

Q: Inflation caused by a cut in income tax is an example of a) expectations-generated inflation b)…

A: In an economy, inflation can be caused due to different market conditions such as supply-side or…

Q: Match- Identify each item as Expansionary Contractionary Policy Used to stabilize high price levels…

A: Contractionary policy is used to reduce inflation, GDP, employment, price level and used in the…

Q: In every election year, politicians sing their own praises of having stabilized prices through the…

A: Persistent rise in prices of goods and services leafs to inflation. When aggregate demand exceeds…

Q: Suppose there is an increase in aggregate demand. If the Fed wants to stabilize output it could buy…

A: Aggregate demand refers to the total quantity demanded of all the goods, and services in an economy…

Q: Supply-side policies are government policies  a)designed to influence the size of the general…

A: Supply Side Theory is a concept of growing the supply of goods and services with ambition to…

Q: The Government of Bangladesh opted for expansionary fiscal policy to fight economic depression.…

A: Expansionary fiscal policy, implemented by increasing government spending or decreasing taxes,…

Q: Government spending on unemployment benefits, welfare, Medicare, and other programs during a…

A: Recession: It is an economic situation where the aggregate demand in the economy falls causing the…

Q: The natural rate of unemployment   a. is constant over time.   b. does not depend on the rate at…

A: Unemployment is the situation where the workers who are willing to and able to work but unable to…

Q: Graphically show the impact of a crude oil price decrease in the long-run . Include all three…

A: The AD-AS (aggregate demand-aggregate supply) model could be a approach of illustrating value…

Q: Income tax collections: Group of answer choices rise during a recession, thus reduce the severity of…

A: *Answer:

Q: Government stabilization policy   a. can stimulate aggregate demand, but only in the long run.   b.…

A: The government stabilization policy consists of two types of policy monetary and fiscal policy.…

Q: upply-side economists: saw influence beyond in both the Bush and Clinton administrations.…

A: Supply side economics suggest that government policy should be used to improve incentives. This will…

Q: Which of the following is most likely to advocate the use of fine tuning?   Supply-siders Classical…

A: In economics, fine-tuning refers to the situation when there is a use of economic policies to make…

Q: The AD schedule becomes flatter if: fiscal policy is relaxed. interest rate…

A: Aggregate demand basically refers to the whole quantity of demand for all completed products and…

Q: Long-run economic growth can be achieved with Group of answer choices A rightward shift in the…

A: Economic growth is the situation when an economy is able to generate more output or income than the…

Q: Contractionary fiscal policy is designed to combat demand-pull inflation and consists of a decrease…

A: Contractionary fiscal policy is implemented to reduce the inflationary gap. This gap is usually…

Q: There is no long-run trade-off between inflation and output because: Group of answer choices…

A: A.W Phillips developed the concept of Phillips curve. This curve says that there is an inverse…

Q: The text book describes various types of lags that may slow the response of Congress when the…

A: A recession is defined as a period during which the real GDP level, employment level, and income…

Q: In the short run, the increase in investment spending due to the new tax credit shifts the aggregate…

A: The AD-AS model shows how total demand and total supply interact at the macroeconomic level.

Q: Supply-side inflation is caused by: OPTIONS: an increase in aggregate demand and no change in…

A: Inflation refers to the increase in the general price level. Inflation can be demand pull inflation…

Q: supply and demand curves to show the change in the price of bread and the quantity sold, when these…

A: A price-floor(PF) is a  price control or limit  set by the government on  prices charged for a…

Q: A government with debt has an incentive to create inflation to eliminate some debt. Why might it not…

A: Government can create inflation by increasing money dupply. Therefore even with debt,government…

Q: Determine whether the government SHOULD APPLY an expansionary or a contractionary policy. There is a…

A: Government undertakes fiscal policy. Expansionary fiscal policy refers to increase in government…

Q: Aggregate demand shifts right when the government

A: Aggregate demand curve shift right or left according to the changes in consumption,  investment,…

Q: Demand-pull inflation Demand-pull inflation occurs when:       A.  input costs rise.     B.…

A: Demand pull inflation is nothing but the inflation due to the change in demand.

Q: Assess the validity of the following statement:  An increase in government spending, the target…

A: When talking about a change in government spending, it can be said that it is one of the components…

Q: Active policy making refers to nondiscretionary policy making. relying on policies that act as…

A: Economics is a branch of social science that describes and analyzes the behaviors and decisions…

Q: Explain the role of supply-side policies in the macro-economy. In the context of your analysis…

A: Supply side policies are the policies which lead to increased growth by increasing the aggregate…

Unemployment and Cost of Unemployment

Unemployment is the state of being unemployed, even when an individual is actively seeking work opportunities. The unemployment rate refers to the percentage of the workforce that is currently unemployed.