Because fluctuations in the world oil price make the U.S. short-run macroeconomic equilibrium fluctuate, someone suggests that the government should vary the tax rate on oil, lowering the tax when the world oil price rises and increasing the tax when the world oil price falls, to stabilize the oil price in the U.S. market. If this suggestion is implemented, when the world price of oil ______, aggregate supply would ______. A. changes; not change B. falls; increase C. rises; decrease D. falls; decrease E. rises; increase

Because fluctuations in the world oil price make the U.S. short-run macroeconomic equilibrium fluctuate, someone suggests that the government should vary the tax rate on oil, lowering the tax when the world oil price rises and increasing the tax when the world oil price falls, to stabilize the oil price in the U.S. market. If this suggestion is implemented, when the world price of oil , aggregate supply would . A. changes; not change B. falls; increase C. rises; decrease D. falls; decrease E. rises; increase

Macroeconomics

13th Edition

ISBN:9781337617390

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter18: Debates In Macroeconomics Over The Rolse And Effects Of Government

Section: Chapter Questions

Problem 2WNG

See similar textbooks

Similar questions

The short-run economic outcome resulting from the increase in production costs is known as——- Suppose now that the government immediately pursues an accommodative policy by increasing government purchases in response to the short-run impact of the higher oil prices. In the long run, given that the government pursues accommodative policy, the output level in the economy will equal ——- level will equal———
In 2006, the economy of Singsville had an aggregate demand and aggregate supply according to the following schedule:Price level Aggregate Demand Short-Run Aggregate Supply100 $1445 $1085110 $1380 $1140120 $1315 $1195130 $1250 $1250140 $1185 $1305150 $1120 $1360160 $1055 $1415 What was the equilibrium price level in Singsville in 2006?
If an increase in taxes in the United States resulted in a very large decrease in aggregate output and a very small decrease in the price level, then the U.S. economy was very likely ___________________________________. Group of answer choices on the very flat part of the short run aggregate demand curve on the very steep part of the short run aggregate supply curve on the very flat part of the short run aggregate supply curve on the very steep part of the short run aggregate demand curve
Suppose that the U.S. economy is at full employment when strong economic growth in Asia increases the demand for U.S.-produced goods and services. How the U.S. price level and real GDP will change in the short run?
What kind of change would happen to aggregate demand, aggregate supply, and real GDP. if foreign countries purchase an unusually large number of U. S. manufactured passenger and military airplanes.
Just solve questions 41-44, thank u! 30.A surplus of product will occur when price is: above equilibrium with the result that quantity demanded exceeds quantity supplied above equilibrium with the result that quantity supplied exceeds quantity demanded below equilibrium with the result that quantity demanded exceeds quantity supplied below equilibrium with the result that quantity supplied exceeds quantity demanded 31.Which of the following would decrease aggregate demand and shift the AD curve to the left? a decline in personal income tax rates a decline in consumer spending a higher level of government purchases a fall in interest rates 32.Which of the following is an implicit cost to the Johnston Manufacturing Company? payments of wages to its office workers property taxes rent paid for the use of equipment owned by the Schultz Machinery Company returns that the shareholders could have received if they had not bought shares in the Johnson Manufacturing Company…
Refer to the data in the table given below. Suppose that the present equilibrium price level and level of real GDP are 100 and $280, and that data set A represents the relevant aggregate supply schedule for the economy. (A) Price Level 100 100 100 100 Real GDP 205 230 255 280 (B) Price Level 110 100 95 90 Real GDP 230 230 230 230 (C) Price Level 110 100 95 90 Real GDP 280 255 230 205 a. What must be the current amount of real output demanded at the 100 price level? Real output demanded = $ b. If the amount of output demanded declines by $25 at the 100 price level shown in A, what will be the new equilibrium real GDP? The new equilibrium level of real GDP = $ In business cycle terminology, what would economists call this change in real GDP? (Click to select)
The economy of Ashville is currently in a macroeconomic equilibrium, as depicted by point E, in the accompanying figure. The main component of Ashville's exports consist of the raw materials that it derives from its natural resources. Suppose that the world demand for raw materials decreases sharply, resulting in a decrease in the price of raw materials throughout the world. The decrease in the world demand for raw materials, which is the major source of Ashville's exports, will the level of aggregate demand in Ashville, causing a ▼shift in the AD curve. The decrease in the world demand for raw materials, which implies a decrease in the level of factor prices, leads to in the unit cost of production in Ashville, causing a 7 shift in the AS curve. Use the three-point curve drawing tool twice to draw and label new AS and AD curves that shows the effect of this shock on Ashville's economy. Carefully follow the instructions above, and only draw the required object. The overall effect of…
“The oil Price run-up of 2007-08 was caused by strong demand confronting stagnating world production. Although the causes were different, the consequences for the economy appear to have been very similar to those observed in earlier episodes, with significant effects on overall consumption spending and purchases of domestic automobiles in particular. The experience of 2007-08 should thus be added to the list of recessions to which oil prices appear to have made a material contribution.” Source: Hamilton, J.D., 2009. Causes and Consequences of the Oil Shock of 2007-08 (No. w15002). National Bureau of Economic Research. a) Oil price shocks have an evident impact on the short run aggregate supply curve. With the help of a graph demonstrate how rising oil prices affect the SRAS and explain what other factors can cause this shift. b) Different theories…
Assume that the economy is currently in short-rim equilibrium Use words and diagrams to describe what will happen to equilibrium price and equilibrium output in the following two cases. An increase in foreign real national (2.S) A flood in the country (2.5)
A decrease in the availability of an important major resource such as oil shifts aggregate supply left. True or False
Part 2: Higher personal taxes in the U.S. will affect personal disposable income which in turn will affect the domestic demand for goods and services. Costs of production, however, continue declining resulting from outsourcing overseas. What do you expect the U.S. output and prices in the near future? Assume we are moving from the old equilibrium to a new equilibrium. Please state clearly your assumptions and include a graph to support your answer.