In the first quarter of 2020, US real GDP declined about 9%, due to the economics shocks from the Covid 19 virus.  If prices were completely flexible, and this means all prices, both inputs (such as labor), as well as output prices, what would you think would have been the drop in GDP?  If prices are completely fixed, would the drop in GDP be greater or less than the flexible case? Why?

Q: Now assume you are examining a new economy. You learn that the mpc of this new economy is 0.75 and…

A: Given Information MPC = 0.75Change in Output level = 3,000so, Multiplier = 11 -mpc

Q: How could you estimate the real GDP gap?

A: To find : How economy is in equilibrium and what is real GDP gap.

Q: 1. If firms only know and care about their own production levels and are not aware about the…

A: The entire quantity of demand for all finished products and services generated in an economy is…

Q: An economy has three sectors: manufacturing, underwater basket weaving, and energy. Manufacturing…

A: The manufacturing unit sells 30% of its output to underwater basket weaving. It uses 30% of its…

Q: Consumption $550 Investment $200 Exports $60 Imports $90 Government Spending $100 Taxes $70…

A: GDP is a measure of all value added created inside an economy. The gross domestic product, or GDP,…

Q: address the problem of an economic recession caused by high inflation, governments and central banks

A: An economic recession is a prolonged period of considerable fall in economic activity that often…

Q: What do you expect about the unemployment rate and inflation rate when we have the actual level of…

A: Actual level of output refers to the production of goods and services that are actually produced in…

Q: Economic activity is subject to fluctuations (booms and slumps). Which of the following statements…

A: "Business cycle measures the fluctuations in the economy over time." "Automatic stabilisers…

Q: In the graph below, the equilibrium price level and the equilibrium real GDP are found where the two…

A: Aggregate demand refers to the total quantity demanded by all consumers present in the market at…

Q: According to Keynes, when the price level rises, it causes the interest rate to do what? It causes…

A: Money Demand: - The demand for money is the individual's desire to keep their assets in the form of…

Q: You are the chair of the Malaysian Economic Council. There has been an extremely hot weather due to…

A: In Keynesian economics, an economy is said to be operating at a long-run equilibrium at a output…

Q: A boom may be caused by increase in aggregate demand in an economy. Explain how increase in…

A: According to Keynesian economics, aggregate demand is considered as the driver of economic growth in…

Q: Explain how each of the following will affect the consumption and saving schedules (as they relate…

A: Gross domestic product (GDP) is the standard measure of the value added created through the…

Q: If the economy is net importer, what will that do to the aggregate expenditure function and…

A: The change in aggregate expenditure function and the equilibrium level of real GDP when economy is…

Q: The decline in real GDP from $1,000 billion to $500 billion    considered a recession

A: Recession is the macroeconomic term which represents the contraction in the business cycle of the…

Q: In the above figure, for a shift from AD1 to AD2, the aggregate demand decreases by     1)  110.…

A: Aggregate demand is the total amount of goods and services demanded at each price level in an…

Q: In a closed economy, subsistence consumption is 10 billions, households spend 60% of their net…

A: Given; Subsistence consumption=10 billion Investment= 40 billion Tax= 20 billion Government…

Q: Compute Public savings, taxes, private saving, national saving, and investment based on the…

A: Since you have asked multiple questions, we will solve first question for you. If you want any…

Q: Use the following equations for question 16. C = $400 +0.8Y  I = $300  G = $200 X = $300 -0.4Y…

A: Ans.16) GDP: The GDP or the gross domestic product can be defined as the measurement of the final…

Q: ecognize why economists believe that economic problems such as “shocks” and “sticky prices” are…

A: The stability of GDP is one of the primary attributes of economic growth. But, often GDP fluctuates…

Q: Consider an economy described by the following equations: Y = C+I+G C = 100+0.75 (Y-T) I = 500-50r…

A: Hi, thank you for the question. As per our Honor code, we are allowed to attempt only first three…

Q: Assume that the economy has an inflationary gap. Explain how the economy will remove this gap…

A: An inflationary gap measures the difference between the actual production of the economy and the…

Q: In our modern economy, the adjustment process necessary to eliminate a recessionary gap is very…

A: The adjustment process implies a self-adjustment mechanism through price adjustment. This…

Q: Suppose the economy experiences a "supply shock" due to a fall in oil prices. As a result, the…

A: Gross Domestic Product (GDP) refers to the total or final value of all the goods and services that…

Q: The national income (Y) of a country has the form: Y = 0.48K0.4L0.3NX0.01 Where: K is capital, L is…

A:

Q: 24. Using the macroeconomic data in #21 above and assuming (i) a full employment economic output of…

A: 24. AG=5 Fiscal Multiplier = ∆Y/∆G => AY = 4 * 5 = 20 Thus, Increase in government expenditure…

Q: The following graph shows the aggregate demand curve (AD), the short-run aggregate supply curve…

A: The image is unreadable. Kindly upload again.The given graphs are blurry.Reupload the question to…

Q: Suppose that in April 2023, policymakers undertake the type of policy that is necessary to bring the…

A: In first Paragraph   1.) Recession is coming when two consecutive quarters of decline in GDP.…

Q: Virtually all purchases of consumer nondurable goods do not involve extended credit terms. Yet that…

A: Nondurable goods refer to consumer items with a brief lifespan, commonly exhausted or worn out…

Q: Q1: There are two equations for macroeconomic equilibrium in an economy. State them Show…

A: Macroeconomic equilibrium can be defined as a point wherein the amount of aggregate demand rises to…