Consider an economy located near the Indian Ocean where the main industries are agriculture and tourism. Policymakers and economic advisors have determined that consumers' spending behavior is described by the equation: C = 255 +0.75DI while the domestic investment spending behavior by firms is fixed at $250 billion. Currently, the population is 250 million, the labor force participation rate is 68 percent, and the unemployment rate is 4 percent. The policymakers and economic advisors have also determined that the short run aggregate supply of goods and services in the economy is described by the equation Y=Ypot + 75(P - Pe), while the potential level of real GDP is $2075 billion and the expected price level at full employment, Pe, is 115. Net taxes is described by the equation: T = 120 +0.2Y while the government spending is fixed at $500 billion. Trading occurs mostly with neighboring economies and currently total imports is $300 billion while total exports is $200 billion. (Question 9 of 9) Now consider that in the following year, given the economy's outcome from before and following recommendations from the economic advisory board, the government increases their funding of student grants by $80 billion. At the same time, the overall population increased by 100 million people. Describe the economy before and after the government's policy. (complete the sentences) Before the government's policy, the economy was in gap with the overall price level being expected. With the natural rate of unemployment being conclude that the government's main concern is government implemented ✓ before, the standard of living being 6 percent, one can By increasing their funding of student grants by $80 billion, the policy. This resulted in the government's budget balance being before, and the economy
Consider an economy located near the Indian Ocean where the main industries are agriculture and tourism. Policymakers and economic advisors have determined that consumers' spending behavior is described by the equation: C = 255 +0.75DI while the domestic investment spending behavior by firms is fixed at $250 billion. Currently, the population is 250 million, the labor force participation rate is 68 percent, and the unemployment rate is 4 percent. The policymakers and economic advisors have also determined that the short run aggregate supply of goods and services in the economy is described by the equation Y=Ypot + 75(P - Pe), while the potential level of real GDP is $2075 billion and the expected price level at full employment, Pe, is 115. Net taxes is described by the equation: T = 120 +0.2Y while the government spending is fixed at $500 billion. Trading occurs mostly with neighboring economies and currently total imports is $300 billion while total exports is $200 billion. (Question 9 of 9) Now consider that in the following year, given the economy's outcome from before and following recommendations from the economic advisory board, the government increases their funding of student grants by $80 billion. At the same time, the overall population increased by 100 million people. Describe the economy before and after the government's policy. (complete the sentences) Before the government's policy, the economy was in gap with the overall price level being expected. With the natural rate of unemployment being conclude that the government's main concern is government implemented ✓ before, the standard of living being 6 percent, one can By increasing their funding of student grants by $80 billion, the policy. This resulted in the government's budget balance being before, and the economy
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
options:
a contractionary fiscal
a contractionary monetary
a recessionary
an expansionary fiscal
an expansionary monetary
an inflationary
equal to
greater than
grew
inflation
less than
receded
the same as
unemployment
Transcribed Image Text:Consider an economy located near the Indian Ocean where the main industries are agriculture and tourism. Policymakers and economic
advisors have determined that consumers' spending behavior is described by the equation: C = 255 +0.75DI while the domestic investment
spending behavior by firms is fixed at $250 billion. Currently, the population is 250 million, the labor force participation rate is 68 percent, and the
unemployment rate is 4 percent. The policymakers and economic advisors have also determined that the short run aggregate supply of goods
and services in the economy is described by the equation Y = Ypot + 75(P - Pe), while the potential level of real GDP is $2075 billion and the
expected price level at full employment, Pe, is 115. Net taxes is described by the equation: T = 120 +0.2Y while the government spending is
fixed at $500 billion. Trading occurs mostly with neighboring economies and currently total imports is $300 billion while total exports is $200
billion.
(Question 9 of 9)
Now consider that in the following year, given the economy's outcome from before and following recommendations from the economic advisory
board, the government increases their funding of student grants by $80 billion. At the same time, the overall population increased by 100 million
people.
Describe the economy before and after the government's policy. (complete the sentences)
Before the government's policy, the economy was in
gap with the overall price level being
expected. With the natural rate of unemployment being
conclude that the government's main concern is
government implemented
6 percent, one can
before, the standard of living being
By increasing their funding of student grants by $80 billion, the
policy. This resulted in the government's budget balance being
✓ before, and the economy
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