Macroeconomics (MindTap Course List)
10th Edition
ISBN: 9781285859477
Author: William Boyes, Michael Melvin
Publisher: Cengage Learning
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Question
Chapter 14, Problem 9E
To determine
(a)
To explain:
The implications on the business cycle due to manipulation done by unavoidable administrators.
To determine
(b)
To explain:
The implications on business cycle due to real shocks to the economy.
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Chapter 14 Solutions
Macroeconomics (MindTap Course List)
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Similar questions
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- Describe the four phases of the classical business cycle explaining how employment is typically affected during each phase?arrow_forwardAnalyzing Macroeconomic Events with the IS-MP Diagram. Consider the following events in the macroeconomy. Show how to think about them using the IS-MP diagram. For each, explain how and why GDP in the United States is affected in the short run and show how the central bank should respond if it wishes to stabilize output. (a) The government offers a temporary investment tax credit: for each dollar of investment that firms undertake, they get a credit that reduces the taxes they pay on corporate income. (b) A housing bubble bursts, so that housing prices fall by 20% and new home sales drop sharply. (c) A resurgence of growth in Japan leads to an unexpected increase in the demand by Japanese consumers for U.S. goods.arrow_forwardWhich of the following is not one of the possible general sources of shocks that can cause business cycles? Select one: a. Open market operations to of businesses to increase their global competition. b. Unexpected political events, such as peace treaties, new wars, or terrorist attacks, can create economic opportunities or strains. c. When productivity unexpectedly increases, the economy booms; when productivity unexpectedly decreases, the economy recedes. d. Irregular innovations may contribute to the variability of economic activity.arrow_forward
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