1. Which of the following is concerned with changing the aggregate demand of the nation? A) External balance B) Internal balance C) Expenditure-changing policies D) Expenditure-switching policies Answer:
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1. Which of the following is concerned with changing the aggregate
nation?
A) External balance
B) Internal balance
C) Expenditure-changing policies
D) Expenditure-switching policies
Answer:
2. Which of the following is an example of an expansionary
A) Increase in Taxes
B) Increase in the nation's money supply
C)
Increased government expenditures
D) Reduction in taxes
Answer:
Step by step
Solved in 2 steps
- 1. The macroeconomy of a certain country is described by the following set of equations: Consumption: C = 0.8(Y − T) + 30 Investment: I = −2r + 40 Government expenditure: G = 30 Tax: T = 0.25Y + 20 The equilibrium condition of the monetary market is: 60/P= 0.8Y − 8r + 36 When P =1/3, how much is the equilibrium national income? A. 100 B. 200 C. 300 D. 400 E. None of the above 1-2. Please show the equation of the total demand. (In the form of “Y =…”) A. Y =25/P+ 125 B. Y =50/P+ 125 C. Y =25/P+ 250 D. Y =50/P+ 250 E. None of the above 2. Suppose we are considering a Solow Model without technology progress. Y=K3/4L1/4 Population growth rate=0.03 The capital accumulation is sY-dK s=0.2, d=0.07 Please calculate the capital per capita under the steady state. A. 20 B. 24 C. 8 D. 4 E. 12 F. 16 2-1. Please calculate the marginal product of labor at the steady state. A. 2 B. 1/2 C. 4 D. 8 E. 1 F. None is correct.Consider a closed economy where the goods and money markets are described by the following relationships: C = 200 + 0.9(Y – T) 1 = 400 – 15r M = 200 + Y – 100r G = 150 T = 100 M = 2000 P = 2 Where Cis planned consumption, / is planned investment spending, Tis government tax revenues, G is government purchases, M is the money supply, P is the price level and r is the interest rate. Department of Economics a) Derive the two expressions for the IS and LM equilibrium relationships respectively. Sketch a graph of the two relationships. b) Calculate the equilibrium value of output Y and interest rate r (round off your answers to one decimal point). Compute also the level of consumption and investment spending in equilibrium and check whether the actual level of spending matches the equilibrium level of output.Question 6 If the economy were represented by the following graph, what is the appropriate monetary policy? Price Level LRAS SRAS El P1 AD Real GDP Y1 Yp buy government bonds from commercial banks, thereby lowering interest rates and increasing aggregate demand. Ob sell government bonds to commercial banks, thereby lowering interest rates and increasing aggregate demand buy government bonds from commercial banks, thereby increasing interest rates and decreasing aggregate demand O d) sell government bonds to commerical banks, thereby increasing interest rates and decreasing aggregate demand.
- Question 4Suppose a country’s inflation level is higher than desired, and unemployment levels arelower than expected – the central bank decides that the economy is ‘overheated’ andattempts to use the appropriate monetary policy to deal with the situation. Describe,with the help of the appropriate figure, how a central bank might go about implementingsuch monetary policy, the subsequent effects this has on interest rates, the quantity ofmoney in the market, and the process through which this affects the level of expenditurein the economy.What is a key distinction between monetary policy and fiscal policy in economic management?A. Monetary policy involves government spending and taxation, while fiscal policy focuses on interestrates and money supply.B. Monetary policy is set by the central bank, while fiscal policy is determined by the government'sbudget decisions.C. Monetary policy primarily influences employment and economic growth, while fiscal policy mainlyaffects inflation.D. Monetary policy is a short-term strategy, while fiscal policy is a long-term approach to economicmanagement.What is the advantage of monetary policy over fiscal policy? O. Monetary policy can be implemented faster than fiscal policy O. Once implemented, the effect of monetary policy can be realized faster than fiscal policy O. The monetary policy affecting Investment category, which is more flexible than the Consumption and Government expenditure category O. Monetary policy is more effective at reducing the recessionary/inflationary gap
- 1. A fiscal expansion coupled with a monetary expansion must always causea) Output to riseb) Output to fallc) Interest rates to rised) Interest rates to fall 2. Autonomous consumption isa) a function of disposable incomeb) a function of national incomec) a function of GDPd) a function of savinge) independent of the level of income 3. Monetary policy loses its effectiveness in all of the following situations EXCEPTa. When the IS curve is vertical.b. When the LM curve is nearly horizontal.c. When interest rate controlled by the Fed reaches zero.d. When the IS curve is horizontal. 4. In a small open economy, if the government adopts a policy that lowers imports, then that policy: a) raises the real exchange rate and increases net exports. b) raises the real exchange rate and does not change net exportsc) raises the real exchange and decreases net exportsd) lowers the real exchange rate 5. An increase in the trade surplus of the a small open economy could be the result of a. a domestic…Which of the following would be classed as an expansionary monetary policy? Ο Α. A decrease in the quantity of money. ОВ. A decrease in interest rates. C. An increase in government taxation. O D. An increase in government expenditure. O E. An increase in VAT.What is the ideal balance between monetary and fiscal policy for a nation like Japan, where prices are rising yet unemployment is under control? a. Decrease taxes, increase government spending and increase money supply b. Decrease taxes, decrease government spending and decrease money supplyc. None of these choice is correctd. Increase taxes, decrease government spending and decrease money supply
- 9. What is the difference between monetary policy and fiscal policy? * is known as A-The tool used by the central bank to regulate the money supply in the monetary policy B-The tool used by the government in which it uses its tax revenues and expenditure policies to affect the economy is known as fiscal policy C-Monetary poliey is administered by the government of the country whereas fiscal policy is administered by the eentral bank of the country economy O A and B A only B only A and C TOSHIBAWhich of the following is concerned with changing the aggregate demand of the 1. nation? A) External balance B) Internal balance C) Expenditure-changing policies D) Expenditure-switching policies Answer: 2. Which of the following is an example of an expansionary monetary policy? Increase in Taxes A) B) Increase in the nation's money supply C) Increased government expenditures D) Reduction in taxes Answer:A country's central bank is engaging in monetary contraction, with M going from M0=40 to M1=20. Its economy is as follows. Goods: slc = 3 MPC = 0.7 G = 10 T = 9 Before the policy, the goods market equilibrium is at Y0 = 54. Financial: I = 18-200r Before the policy, the loans market equilibrium is at r = 4.25% and I = 9.5 Money: M0 = 40 P0 = 2 M/P = 0.02 / (r - Y/5000)^2 and finally, Labor: w = MPL = 0.5 * 4.5 * 16^0.6 / L^0.5 w = EP / P0 * L^0.5 Where workers currently expect the price level of EP=2. There are four endogenous variables that adjust in response to shock/policy: Y, I, r, P. The policy variable of interest is M. Therefore, let's approach our solution by first recognizing that all other letters are just constants and plug them in. For example: Y = 2 + 0.5(Y-6)+7+I becomes Y = 12 + 2*I First, express the goods market as expenditure being a linear function of investment I of the form: Y = a + b*I where a and b are parameters (numbers). 1. How does the monetary…