Chapter 11: Aggregate Demand I: Building the IS-LM Model Question: The Keynesian cross shows ...------ of in the . --. and . run. Lütfen birini seçin: O a. equality / planned expenditure / income / short O b. determination / equilibrium income / the interest rate / long. determination / equilibrium income / the interest rate / long. O d. equality / planned expenditure/ income / long. determination /equilibrium income/ the interest rate/short.

Chapter 11: Aggregate Demand I: Building the IS-LM Model Question: The Keynesian cross shows ...------ of in the . --. and . run. Lütfen birini seçin: O a. equality / planned expenditure / income / short O b. determination / equilibrium income / the interest rate / long. determination / equilibrium income / the interest rate / long. O d. equality / planned expenditure/ income / long. determination /equilibrium income/ the interest rate/short.

Principles of Economics (MindTap Course List)

8th Edition

ISBN:9781305585126

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter34: The Influence Of Monetary And Fiscal Policy On Aggregate Demand

Section: Chapter Questions

Problem 4CQQ

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Chapter 11: Aggregate Demand I: Building the IS-LM Model Henüz 1 2 3 cevaplanmadı 5,00 üzerinden Question: Which of the following is false? 10 11 12 15 İşaretlenmiş F Soruyu işaretle 19 20 O a. The Quantity theory assumes income level to change and Keynesian model assumes it to be fixed. Uygulamayı bitir ... Kalan süre 0:14:53 O b. The Fisher equation implies that an increase in inflation will also increase nominal interest rate since real interest rate is constant. The Quantity theory assumes real money balances to be constant but the liquidity preference (Keynes) theory assumes it to change. Od. The Quantity theory assumes nominal interest rate to be determined by price level and the liquidity preference (Keynes) theory assumes it to be determined by real interest rate. The liquidity preference (Keynes) theory implies that an increase in nominal interest rate will increase real interest rate since price level is fixed. O e.
Suppose that in Macroland the consumption and the investment have a negative relationship withthe real interest rate and positive relationship with Y. The Central Bank of the country targets acertain nominal interest rate and lets the money supply adjust in order to reach that interest rate.a. Draw a graph of the IS-LM model in this situation.b. Suppose that the Central Bank announces an increase of the interest rate in the future.Represent graphically the initial position of IS-LM curves. Then, show the IS-LM curves of thefuture, after the announced increase in the interest rate is implemented. (Assume that the ISis constant.).c. Suppose that agents today take into consideration the resulting income of the future whendeciding the amount of consumption and investment. Show what happens to the IS-LMcurves today after the announcement of the CB (tip: the CB is NOT increasing the nominalinterest rate today).d. The government decides to step in and avoid any deviation of Y from the initial…
Refer to Figure 9.1. Assume the economy is initially at point A. The eventual change from a shock that increases investment expenditure is best represented by which long - run equilibrium combination of price level and real GDP? Figure 9.1 LRAS OA Pz Y2 O B. P Y1 OC Pi Y2 OD. Pz Y, SRAS Real GOP If the MPC = 0.8, an increase in investment spending from $35 billion to $38 billion will increase real GDP by %3D O A. $3 billion. O B. $3.75 billion. OC. $15 billion. O D. $24 billion.
2. The graph below shows the AD-AS model in short-run equilibrium at price level Po and level of real GDP at Yo. Label the following: AD, SRAS, LRAS, Po and Yo. P Y A. Is this SR equilibrium a recessionary gap or an inflationary gap? Why is the undesirable? B. Assume Congress and the President decide to act. How would you suggest they alter each of the following (1,↓↓, or no change)? - Taxes - Transfer Payments -Government Spending C. Show the effects of these changes in the space above. Assume this intervention brings the economy back to potential GDP. D. As the economy moves from Yo to Yp, what happens to the following (1,↓, or no change)? - Real GDP - the unemployment rate - The price level - the rate of inflation
According to the Keynesian model, which of the following would NOT increase aggregate demand? Government expands its social projects and increases taxes to balance the budget а. O b. A decrease in the number of employees in the government agencies c. Government drops the taxes for private businesses O d. Government establishes a new agency that helps the unemployed to find a job е. Government changes the laws whereby the tax of the interest earned becomes changes from a positive number to zero.
09. The left-hand Which of the following statements is tru about the diagrams above depicting the macroeconommy in both Keynesian and Classical frameworks and a change from AEo to AE* and ADo to AD*? a) The left-hand diagrams show the effect of an increase in Aggregare Expenditures (and Aggregate Demand), where the short-run Aggregate Supply is horizontal, meaning a constant products price level. b) The right hand diagrams show the effect of an increase in Aggregate Expenditrues (and Aggregate DEmand), where short-run Aggregate Supply is vertical (constant Aggregate Quantity Supplied). c) The left-hand diagrams illustrate the Keynesian range of the shor-run Aggregate Supply curve, where Keynesian expansionary policy does not cause any inflation and thus is very effective. d) The right-hand diagrams illustrate the Classical or Monetarist range of the short-run Aggregate Supply curve, where Keynesian expansionary policy is totally dissipated in…
Using AS and AD curves to illustrate, describe the effectsof the following events on the price level and on equilibriumGDP in the long run assuming that input prices fullyadjust to output prices after some lag:a. An increase occurs in the money supply above potentialGDPb. GDP is above potential GDP, and a decrease in governmentspending and in the money supply occursc. Starting with the economy at potential GDP, a war inthe Middle East pushes up energy prices temporarily.The Fed expands the money supply to accommodate theinflation.
Chapter 11: Aggregate Demand I: Building the IS-LM Model Question: The Keynesian model suggests that should be preferred over .... since the ...... is larger than the ...***.... Lütfen birini seçin: O a fiscal policy/ monetary policy / unplanned changes in inventories / marginal propensity to consume. b. fiscal policy / monetary policy /impact of money supply/marginal propensity to consume. OC. government spending/ tax cuts/ tax multiplier /government-spending multiplier. d. government spending/tax cuts/government-spending multiplier / tax multiplier. monetary policy/fiscal policy/impact of money supply/marginal propensity to consume.
estion 4 The Government introduces a tax increase. Answer the following (a) Use the Keynesian Cross to determine how the policy affects national income, Y, in the short run. (b) Is it possible to predict the magnitude of the change in income? Explain (c) Based on your answer from part (a), how does consumption, C, change? Explain (d) Now use the IS-LM model to predict how the policy affects national income in the short run. (e) How does the magnitude of the change in national income in part (d) compare with the magnitude of the change in part (a)? If they differ, what accounts for the difference? Explain. re Please write out your answer and scan and upload it at the end of the
R MPA a MPB ISB ISA the Fed wilIN To prevent a Consider figure, if there is a sharp increase in consumer confidence, the economy will move from point and the economy moves from point O A. a to point d; recession; lower interest rates; d to point b O B. b to point a; bubble; raise interest rates; a to point d O C. d to point c recession; lower interest rates; c to point b O D.a to point d; recession; lower interest rates; d to pointc 12 O E. c to point b; bubble; raise interest rates; b to point C LG
PAE Expenditure Line PAE-500+.9Y 6000 5900 5500 5450 5000 500 45 5000 5500 6000 :Refer to the figure above. Based on the Keynesian cross diagram, short-run equilibrium output equals اختر أحد الخيارات 5000 a O 5450 b O 5500 .c O 5900 d O
What is the key difference between the IS-MP-PC model and the AD/AS model? O In AD/AS model, the government can not borrow In AD/AS model, the central bank can not change the interest rate O In AD/AS model, the central bank sticks to a rule O In AD/AS model, the government can not change its expenditure