QUESTION 38 48 44 40 36 32 28 24 20 16 12 8 4 0 E,Q I 0 8 16 24 32 40 AE2 AE1 Q 38. Which of the following could have caused a shift of the Aggregate Expenditures curve from AE1 to AE2? O a) an increase in the price level b) an increase in the rate of interest c) an increase in government purchases of goods and services d) a contractionary monetary policy

QUESTION 38 48 44 40 36 32 28 24 20 16 12 8 4 0 E,Q I 0 8 16 24 32 40 AE2 AE1 Q 38. Which of the following could have caused a shift of the Aggregate Expenditures curve from AE1 to AE2? O a) an increase in the price level b) an increase in the rate of interest c) an increase in government purchases of goods and services d) a contractionary monetary policy

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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1. Suppose the economy has fallen into a recession (output level ?0), and the federal government wants to return the economy to its original level of output (?). Respond to each of the following questions using appropriate diagrams and explanations.(a) If policy makers can only use fiscal tools, what should they do?(b) If policy makers can only use monetary tools, what should they do? (c) What should they do if they want to return output to its original level but keep investment from changing?
11. If the rightward shift of the IS curve is the result an increase in government spending the increase in the level of output from YO to Y2... a) b) is equal to the increase in government spending. is greater than the increase in government spending is smaller than the increase in government spending. c)
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Question 2 Suppose that the government has the following nominal budget constraint. G = T+AB + AMS The above equation means that government spending (G) is financed by taxes (T), bond (B) changes, or/and money supply (MS) changes. Suppose that the government spending is only financed by the revenue from a money supply change, which is called seigniorage gain. The real seigniorage gain, S, is defined as S : AMS/P. Show that S = μ·f (Y, i) where the growth rate of money supply is given by µ, and Md real money demand = f(Y, i) and i=r+μ. P = b. Interpret the condition, S Under what conditions, ds C. dμ results. a. µ· L(Y, i), based on the statement "inflation is a tax." ds ds 0,
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