170Price140level120100DAD5AD4AD 3AD, AD23.0 4.0 5.0 6.0 7.0 8.0Real GDPIn Exhibit 20-8, if aggregate demand shifts from AD₁ to AD3,O a. real GDP will increase from $3.0 to $4.0, and the price level will increase from 100 to 140.Ob. real GDP will increase from $3.0 to $7.0, and the price level will increase from 100 to 120.Oc. real GDP will increase from $3.0 to $7.0, and the price level will increase from 100 to 140.Od. real GDP will increase from $3.0 to $4.0, and the price level does not change.

According to the given graph, At AD1, real GDP = $3 and Price level = 100 At AD2, real GDP = $4 and…

Answered: 170 Price 140 level 120 100 D AD5 AD4…

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter11: Managing Aggregate Demand: Fiscal Policy

Section: Chapter Questions

Problem 2TY

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You are hired by the Council of Economic Advisors (CEA) as an economic consultant.The chairperson of the CEA tells you that she believes the current unemployment rate istoo high. The unemployment rate can be reduced if aggregate output increases. She wantsto know what policy to pursue to increase aggregate output by 300 billion TL. The bestestimate she has for the MPC is 0.8. Which of the following policies should yourecommend?a) Increase government purchases by 75 billion TL.b) Reduce taxes by 75 billion TL.c) Reduce taxes by 75 billion TL and to increase government purchases by 75 billion TL.d) Reduce the budget deficit by 300 billion TL
Assume an economy operates in the intermediaterange of its aggregate supply curve. State thedirection of shift for the aggregate demandor aggregate supply curve for each of thefollowing changes in conditions. What is theeffect on the price level? On real GDP? Onemployment?a. The price of crude oil rises significantly.b. Spending on national defense doubles.c. The costs of imported goods increase.d. An improvement in technology raises laborproductivity.
Which of the following policies will NOT shift the Aggregate Expenditure curve upward? Select one: O a. increasing autonomous taxes O b. decreasing autonomous taxes O c. increasing autonomous transfer payments O d. increasing government expenditures on goods and services
"The following chart indicates the aggregate demand (AD) and short-run aggregate supply (SRAS) schedules of decision- makers for the current period. Both buyers and sellers previ- ously anticipated that the price level during the current period would be P 105 a. Indicate the quantity of GDP that will be produced during this period. b. Will it be a long-run equilibrium level of GDP? Why or why not? c. What will the relationship between the actual and natural rates of unemployment be during the period? Explain 20 your answer.
estion The table gives aggregate demand and supply schedules for a hypothetical economy. Amount of Real Output Demanded Price Level (Index Amount oI Real Output Suppiied Value) $ 200 300 $ 500 300 250 450 400 200 400 500 150 300 600 100 200 If the amount of real output demanded at each price level falls by $200, this might have been caused by O A. a decrease in the personal income tax. O B. an increase in net exports. OC.a worsening of business expectations. O D. an increase in consumer wealth.
$ Which of the following would cause the Aggregate Supply curve to move from AS to AS2 in the graph below? fs Price Level 150 140 130 120 110 100 90 80 70 60 % 5 0 16 5 O A general increase in energy and labor cost for businesses. O A federal government increase in spending. t 6 10 15 Real GDP ($ billion) -AS-AD-AS2 2 fa lyi & 7 7 J * 20 8 8 num lk ( 25 (1¹) 9
Which of the following will NOT shift the ADTT curve? O a. A rise in consumer confidence O b. A rise in interest rates O c. A rise in government spending O d. A rise in exports
Which of the following will NOT shift the ADT curve? O a. A rise in government spending O b. A rise in exports Ос. A rise in interest rates O d. A rise in consumer confidence
Why is the aggregate demand curve downsloping? Specify how your explanation differs from the explanation for the downsloping demand curve for a single product. What role does the multiplier play in shifts of the aggregate demand curve?
P4 AS2 AS, Aggregate output Y Figure 11.3 Refer to Figure 11.3. Hurricane Katrina destroyed a large portion of the infrastructure along the Gulf of Mexico coast. This caused Select one: a. the short-run aggregate supply curve to shift from AS 1 to AS 0- b. the short-run aggregate supply curve to shift from AS 1 to AS 2. c. the economy to move from Point C to Point B along AS 1. d. the economy to move from Point B to Point A along AS 1. Price level
If output is less than planned aggregate expenditure, there will be Lütfen birini seçin: O A. an unplanned increase in inventories O B. a planned decrease in inventories. O C. no change in inventories O D. a planned increase in inventories O E. an unplanned decrease in inventories
Price level 170 140 F 120 100 0 L AS AD3 AD, AD₂ 3.0 4.0 5.0 6.0 7.0 8.0 Real GDP In Exhibit 10-8, if aggregate demand shifts from AD₁ to AD2. a. real GDP will increase from $3.0 to $7.0, and the price level will remain the same. AD5 ADA Ob. real GDP and the price level will both remain the same. Oc. real GDP will increase from $3.0 to $4.0, and the price level will increase from 100 to 140. O d. real GDP will increase from $3.0 to $4.0, and the price level will remain the same.

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