Exploring Economics
8th Edition
ISBN: 9781544336329
Author: Robert L. Sexton
Publisher: SAGE Publications, Inc
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Chapter 22, Problem 7P
To determine
(a)
To illustrate:
The inflationary gap on the provideddiagram.
To determine
(b)
To explain:
The final long-run equilibrium with the help of a diagram.
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If the marginal propensity to consume is zero, a temporary tax increase leads to a small decreasein inflation in the short run but a large decrease in inflation in the long run.Answer True or False. Remember to include your explanation
In the Keynesian framework, which of the following events might cause recession/inflation. Explain using the Aggregate Demand/Aggregate Supply with examples. (Examples are crucial please!)
d. The interest rates rises
e. The good imported from a major trading partner becomes much less expensive
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Economics
If there is an inflationary gap, what should the Fed do? Explain, provide name, and show in i-M space.
Consider the following macroeconomy, with fixed prices (all amounts are in millions of $):
YFE = 7000
C = 40 + 0.9 YD
I = 500
G = 250
T = 40
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d. Go back to the original eqm in part a. Now…
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