Consider the figure to the right. Suppose that businesses in this nation initially had been exporting significant amounts of domestically produced goods and services abroad. Assume that other mations of the world have experienced a sudden improvement in economic conditions. What happens to the nation's aggregate demand curve? In the short run, will the nation experience an nflationary gap or a recessionary gap? Explain. 1.) Using the line drawing tool, draw a new AD curve that shows the effects of a sudden improvement in economic conditions in other nations. Label your line 'AD₂. 2) Using the point drawing tool, indicate the economy's new short-run equilibrium price and level of real GDP. Label this point 'E₂. Carefully follow the instructions above, and only draw the required objects. In the short run, the equilibrium price level will at full employment. and the nation will experience gap because the short-run equilibrium level of real GDP per year is real GDP

Consider the figure to the right. Suppose that businesses in this nation initially had been exporting significant amounts of domestically produced goods and services abroad. Assume that other mations of the world have experienced a sudden improvement in economic conditions. What happens to the nation's aggregate demand curve? In the short run, will the nation experience an nflationary gap or a recessionary gap? Explain. 1.) Using the line drawing tool, draw a new AD curve that shows the effects of a sudden improvement in economic conditions in other nations. Label your line 'AD₂. 2) Using the point drawing tool, indicate the economy's new short-run equilibrium price and level of real GDP. Label this point 'E₂. Carefully follow the instructions above, and only draw the required objects. In the short run, the equilibrium price level will at full employment. and the nation will experience gap because the short-run equilibrium level of real GDP per year is real GDP

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter24: The Influence Of Monetary And Fiscal Policy On Aggregate Demand

Section24.2: How Fiscal Policy Influences Aggregate Demand

Problem 2QQ

See similar textbooks

Similar questions

Consider the figure to the right. Suppose that businesses in this nation initially had been i exporting significant amounts of domestically produced goods and services abroad Assume that other nations of the world have experienced a sudden decline in economic conditions. What happens to the nation's aggregate demand curve? In the short run, will the nation experience an inflationary gap or a recessionary gap? Explain 1) Using the line drawing tool, draw a new AD curve that shows the effects of a sudden decline in economic conditions in other nations Label your line 'AD, 2) Using the point drawing tool. Indicate the economy's new short-run equilibrium price and level of real GDP Label this point E₂ Carefully follow the instructions above, and only draw the required objects In the short run, the equilibrium price level will and the nation will experience gap because the short-run equilibrium level of real GDP per year is real GDP at full employment 22 Price Level a LRAS Real GDP per Year…
In the foreign exchange market, value of the dollar has fallen. Simultaneously, businesses are feeling hesitant to undertake new real investment (“animal spirits” are down) and households are nervous about the future (Consumer Confidence Index is down) and are cutting back on consumption while they save more. What happens to the Aggregate Demand and Aggregate Supply curves of the U.S.? 1. Aggregate Supply does not change. AD has two opposing effects: exports rise due to the fall in the dollar, and both investment and consumption fall. It is not clear which effect is stronger. AD can move either to the left or to the right. 2.Aggregate Supply does not change. AD has two effects on it. Exports fall due to the fall in the dollar, and both investment and consumption also fall. AE falls and AD shifts to the left. 3.Aggregate Supply does not change. AD has two effects on it. Exports rise due to the fall in the dollar, and both investment and consumption also fall. AE falls and…
Using the three-point curved line drawing tool, show how the following event will impact the economy's short-run aggregate supply (AS) curve. Properly label this curve. 12- 11- Event: 10- High taxes and excessive regulation cause firms to reduce the quantity of their physical capital. 9- Note: Carefully follow the instructions above and only draw the required object. ASO 8- 4- 3- 2- 1- 0- 10 Aggregate output (income), Y Price level, P
Look at Figure 2. Assume this aggregate demand diagram represents an economy with government, where: a = exogenous consumption b = the marginal propensity to consume t = the tax rate |= investment G = government spending Y = income Figure 2 Aggregate demand AD, AD. 45° Income What is the equation for the aggregate demand schedule ADo? Select one: O ADO = b+ a(1 - t)G +1+ Y O ADO = a + b(1 – 1)Y + 1+ G O ADO = a + b(1 - t) I+ Y+ G O ADO = b+ a(1 – 1)Y + /+ G Next page > ( Previous page PHILIPS
18. Use the AD/AS model to illustrate the following. Draw 6 graphs by hand. Show how the AD or the AS curve shift and in what direction (left or right). Also state what happens to equilibrium real GDP (Y), employment, and the equilibrium price level. [Note: Use the SRAS curve, not the LRAS.] a. an increase in government spending and/or transfer payments b. restrictive fiscal policy c. expansive monetary policy d. increase in investment according to Keynesians e. increase in investment according to supply-side economists f. a stock market crash
What is the effect on China's aggregate demand when the United States goes into an expansionary period? When the United States goes into an expansionary, China's aggregate demand _______. Group of answer choices increases and China's AD shifts to the left increases and China's AD shifts to the right decreases and China's AD shifts to the left decreases and China's AD shifts to the right
Use the Aggregate supply and Aggregate Demand Model below to answer the questions that follow.Aggregate Supply and Aggregate Demand Model 1. Examine the influence of government expenditure on investment in a nation. Use Jot Inc. Ltd a multinational construction company in which you are the Chief Exec of the firm that that is highly diversified and recieves funds to construct highways and other government funded projects. Also, explain the factors that cause the Aggregate Demand curve to be downward sloping left to right
The graphs illustrate an initial equilibrium for the economy. Suppose that the government increases taxes. Use the graphs to show the new positions of aggregate demand (AD), short-run aggregate supply (SRAS), and long-run aggregate supply (LRAS) in both the short run and the long run, as well as the short-run and long-run equilibriums resulting from this change. Then, indicate what happens to the price level and GDP in the short run and in the long run. Aggregate price level Short-run graph LRAS SRAS Short-run equilibrium Real GDP AD Aggregate price level Long-run graph LRAS Long-run equilibrium Real GDP AD SRAS gate
Explain/discuss how an exogenous increase of Mexico’s GDP will influence U.S. aggregate demand and GDP.
18. If more American tourists visit South Africa. The of dollars increases and the dollar in the rand/dollar exchange rate A Supply; depreciates Demand; depreciates C upply; appreciates Demand; appreciates 19. In balance-of-payments accounting, the sale of a foreign production facility by a SA firm is a item in the SA balance of payments; the deposit of funds in a foreign bank account by a SA citizen item in the SA balance of payments. A Debit; also is a debit В Debit; is a credit C Credit; is a debit D Credit; also is a credit 20. The table below shows a section of the national accounts for a small country in 2018. Answer the question that follows using the information provided in the table. 9 800 Consumption expenditure Government expenditure 3 500 Depreciation Exports Imports Gross capital formation (investment) Primary income payments Primary income receipts 500 2 200 1 900 2 500 300 200 The value of Gross Domestic Product (GDP) is: (4r A 16 100 B 19 900 C 16 600 D 15 600 21. To…
>>>Use the Aggregate supply and Aggregate Demand Model below to answer the questions that follow. Aggregate Supply and Aggregate Demand Model Examine the influence of government expenditure on investment in a nation. Use Jot Inc. Ltd a multinational construction company in which you are the Chief Exec of the firm that is highly diversified and recieves funds to construct highways and other government funded projects. Also, explain the factors that cause the Aggregate Demand curve to be downward sloping left to right.
Assume the graph represents the Japanese economy during the first quarter of 2014. Use the information from the seventh paragraph of the Washington Post article Japan Recession, Europe Stagnation Cast Pall over Global Economic Outlook to demonstrate how the policies of Prime Minister Shinzo Abe affected the economy in the subsequent quarters of 2014. The graph depicts aggregate demand (AD), short‑run aggregate supply (SRAS), and long‑run aggregate supply (LRAS). LRAS is sometimes labeled potential output.