A change in any factor that influences our planned expenditure other than the price level, brings a change in aggregate demand. One of these factors is fiscal and monetary policy.” In terms of the statement above, assess how fiscal and monetary policy influences aggregate expenditure in an economy. Use appropriate diagrams to motivate your answer.
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A change in any factor that influences our planned expenditure other than the price level, brings a change in aggregate
In terms of the statement above, assess how fiscal and monetary policy influences aggregate expenditure in an economy. Use appropriate diagrams to motivate your answer.
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- Using a macroeconomics demand/supply analysis, where do you think current output is relative to what the economy is capable of producing? Look at recent trends in the data. What are the recent trends in the components of aggregate demand (consumption spending, investment spending, government purchases, and exports and imports?The graph below is associated with a hypothetical country. Consider an increase in aggregate demand (AD). Specifically, aggregate demand shifts to the right from AD1AD1 to AD2AD2, causing the quantity of output demanded to rise at each price level. For instance, at a price level of 140, output is now $400 billion, where initially it was $300 billion. Fill in the missing values in the table by selecting the change in each scenario required to increase aggregate demand. Change required to increase AD Expected rate of return on investment. (decrease/increase) Incomes in other countries (decrease/increase) Consumer expectations about future profitability. (improve/worsen) Government spending (increase/decrease)Use the following graph, which shows an aggregate demand curve, to answer the next question. If the price level increases from 150 to 250, the real output demanded will Multiple Choice increase by $800 billion. increase by $200 billion. decrease by $600 billion. decrease by $200 billion.
- Use the figure to answer the following questions. Explain your reasoning and show your answers on the graph. Copy the image to MSWord, and draw the appropriate lines using the 'design' tab and then select the shapes you want to include, lines, arrows, etc. Save your answer and upload your file. a. At which equilibrium point the economy has an inflationary gap, and what is its value in percentage points? b. At what point the economy is at full employment, and what is its value in trillions of dollars? c. Draw an AD showing a recessionary gap of 0.5 trillion dollars. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.You will draw four separate Aggregate-Demand/Aggregate-Supply graphs. Each graph will have one curve shift. Be sure to label axis, curves, and equilibrium. Change colors to show the shift and label the new equilibrium. Draw an ADAS graph at equilibrium. Suppose the interest rates on loans on capital goods decrease. Which curve will shift? Draw the new equilibrium. Draw an ADAS graph at equilibrium. Suppose there is an decrease in government spending. Which curve will shift? Draw the new equilibrium. Draw an ADAS graph at equilibrium. Suppose the income of our trading partners increase. Which curve will shift? Draw the new equilibrium. Draw an ADAS graph at equilibrium. Suppose there is widespread concern that prices will continue to rise in the future. Which curve will shift? Draw the new equilibrium.Draw a graph, using the Aggregate Demand – Aggregate Supply curves, the result of a tax increase and cuts in federal expenditures during a period of inflation. Label all axes and curves and show which curve shifts and indicate the new equilibrium. As well as explain your graph in words.
- Which of the following is an example of an expenditure-increasing policy? a. a decrease in import quotas b. an increase in the money supply c. an increase in import tariffs d. higher income taxesThe following graph shows a decrease in aggregate demand (AD) in a hypothetical country. Specifically, aggregate demand shifts to the left from AD1AD1 to AD2AD2, causing the quantity of output demanded to fall at all price levels. For example, at a price level of 140, output is now $200 billion, where previously it was $300 billion. The following table lists several determinants of aggregate demand. Complete the table by indicating the change in each determinant necessary to decrease aggregate demand. Change needed to decrease AD Wealth (increase/ decrease) Taxes (increase/ decrease) Expected rate of return on investment (increase/ decrease) Incomes in other countries (increase/ decrease)A visual/graphic representation of how a decrease in consumer spending shifts the aggregate demand curve.
- The graphs illustrate an initial equilibrium for the economy. Suppose that the government increases spending. 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 real GDP (or aggregate output) in the short run and in the long run. Adjust the graph. explain the second image as well and which is right.The government announces a cut in the income tax rate. (a) Explain the multiplier effect by analysing how a typical consumer would react to this tax cut and which other decisions this reaction would trigger in the economy. (b) Use the AD/AS model to analyse the short-run effects of this policy on GDP and the price level in the economy. (c) What are the long-run effects of the tax cut?Are the determinants of aggregate demand the same things that apply to demand for an individual good?