Consider an economy facing a recessionary gap in the short-run.  Expansionary fiscal policy leads to _____ while an economy’s self-correcting mechanism leads to _____   Question 39 options:   a)  deflation; cost-push inflation   b)  demand-pull inflation; deflation   c)  deflation; demand-pull inflation   d)  demand-pull inflation; cost-push inflation

(23) Assume that the economy begins in long-run equilibrium and that the federal reserve decides to use open market operations to sell bonds. In the short run, what happens to the price level? Group of answer choices (A) It goes down. (B) It goes up. (C) It stays the same.

In 2013, Prussia's aggregate demand curve was determined by the equation M + 0 = 4%. A change in aggregate demand means that in 2014, Prussia's aggregate demand curve was determined by the equation M + U = 7%. Using this information, draw Prussia's old and new dynamic aggregate demand curves on the graph. Inflation rate 14 13 12 11 10 9 8 7 4 3 2 1 0 -4 -3 2-1 0 1 2 3 4 5 Real GDP growth rate AD 2013 AD 2014 6 7 8 9 10 Which of the factors could have resulted in the change in aggregate demand seen between 2013 and 2014? higher consumer confidence an improvement in technology O a decrease in oil prices an increase in imports

Consider the figure to the right. If this country's government decides to increase its short-term spending, what happens to the short-run equilibrium price level, and why? Is this an example of demand-pull or cost-push inflation? Explain. 1.) Using the line drawing tool, draw either a new aggregate demand (AD) curve or a new short-run aggregate supply (AS) curve that shows the effects of temporary government spending increases. Properly label your line. 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. Price Level LRAS₁ Real GDP per Year (S trillions) AS₁ AD₁

a) If a country's natural unemployment rate is 5.5 percent and its actual unemployment rate is 3.5 percent, what is its cyclical unemployment rate?   ___________percent   Instructions: Enter the value for the output gap as an absolute number. (PLEASE ANSWER THIS PART B) b) According to Okun's law, this country would have  an expansionary  output gap of _________percent.

If the economy is in a long-run equilibrium when the Federal Reserve decides that its  inflation target is too low and chooses to raise it, ________.  A) it would likely conduct a tightening of monetary policy by raising the real interest rate for any  given inflation rate  B) it would likely conduct an easing of monetary policy by lowering the real interest rate for any  given inflation rate  C) it would likely conduct an easing of monetary policy where the real interest rate would  increase due to the ensuing decrease in aggregate demand  D) it would likely conduct a tightening of monetary policy where the real interest rate would  increase due to the ensuing increase in aggregate demand  E) none of the above

Inflation redistributes wealth from creditors to debtors when inflation is Question 10 options:   high, whether it is expected or not.   low, whether it is expected or not.   unexpectedly high.   unexpectedly low.

The structural unemployment rate is 1.3% and the frictional unemployment is 2.9%, and the economy's current unemployment rate is 4.2%. The economy is in: Group of answer choices full employment having reached the potential real GDP. a recessionary gap producing less than the potential real GDP. an inflationary gap having more unemployment than the natural unemployment. an inflationary gap having lower unemployment than the natural unemployment.

pols Homework (Ch 15) 4. Using fiscal policy to fight inflation Consider the hypothetical economy depicted on the graph. Initially, the economy operates below full-employment output at a price level of 105 and real GDP of $480 billion. Then aggregate demand (AD) increases from AD₁ to AD₂, moving the economy up along the intermediate and classical ranges of the aggregate supply (AS) curve. Real GDP increases to the full-employment output level of $540 billion, and the price level increases to 120. PRICE LEVEL (CPI) 130 125 120 115 110 100 95 90 85 80 400 420 440 AS AD₂ 460 REAL GDP (Billions of dollars) AD₁ 480 500 520 540 560 580 600 MacBook Pro (?) X

Assume that a country's economy is in equilibrium. a) () Using a correctly labeled AD/AS graph, show how an increase in the price of gasoline, an important input of production, will affect the following in the short run. (i) Real output :- (ii) Price level-Using a correctly labeled graph, show the same effect on the Phillips curve. () Central bank of the country responds to the higher price of oil by increasing the money supply. (i ) ()Explain the process by which the increase in the money supply will affect the aggregate demand in the short run. (ii) (Indicate on the AD/AS graph, how the increase in the money supply will affect real output and the price level. d) () Now assume that instead of using monetary policy in response to the gasoline price increase, the government reduces business taxes, which results in lower production costs. Using a new correctly labeled graph, show the effect of the reduction in business taxes on the following. (i) () Real output - (ii) () Price levele) (…