Suppose government-spending increases while the economy is at full employment. 1. What effect will this action have on the economy? In other words, which curve shifts and in which direction? 2. Where is the economy in the business cycle - YE < YFE, Yɛ = YFE, or Yɛ > YfE 3. What will happen according to Keynes? Explain how the economy returns to full employment. 4. What will happen according to the Long Run Model? Explain how the economy returns to full employment. 5. From your answer in # 4 above, what happens to the Phillips Curve? 6. This was not covered in the video but what do you anticipate the Federal Reserve to do with the key interest rate after the increase in government spending above?

Please answer question 3

Macroeconomics - Keynesian Math

of The economy of Langoria is currently in a state of long-run equilibrium in which the economy is producing at its Natural Real GDP. The level of Real GDP is currently 3 trillion dollars, and the price level is 130. 100 PRICE LEVEL 170 160 150 140 130 120 110 100 2 Changes in a Self-Regulating Economy AD AD₂ BRAS 1 2 3 LRAS 23

Suppose the economy goes into a recession. Which statement reflects a Keynesian response, and which reflects a neoclassical response? A. "The recession is likely caused by bad government policy, so active policy to solve the problem should be avoided" B. "The government should use fiscal policy to boost spending" 1. Neoclassical 2. Keynesian

In the dynamic model of AD-AS in the diagram to the right, the economy is at point A in year 1 and is expected to go to point B in year 2, and the Federal Reserve pursues policy. This will result in OA. short term interest rates higher than what would occur if no policy had been pursued. OB. unemployment rates higher than what would occur if no policy had been pursued. OC. real GDP lower than what would occur if no policy had been pursued. OD. inflation higher than what would occur if no policy had been pursued. MIDD Price level 102 100 LRAS, A 10 Real GDP B 00 LRAS AD. 10.8 11 SRAS₁ SRAS, AD₂

In the Keynesian framework, which of the following events might cause a recession/inflation. Explain using the aggregate demand/aggregate supply. I only need the type of examples that go with the question though (Examples are crucial please!)  d. The interest rate rises e. The good imported from a major trading partner becomes much less expensive 

Consider the neo-classical approach to macroeconomics.  Given there is a recessionary period, that theory suggests that, given some time ... Group of answer choices a. The AD line will shift right b. The AS line will shift left c. The AD line will shift left d. The AS line will shift right

Use the IS curve to explains what happens to the short-run economy when consumers
    become pessimistic about the state of the economy and future GDP growth.

Suppose the economy is initially at K. Which of the following statements best explains how the economy responds to restore long-run macroeconomic equilibrium?   Select one:   a. Over time, the aggregate demand curve will shift to the right until long-run equilibrium is restored at J and the gap is closed.   b. Rising unemployment puts pressure on nominal wages to fall. The SRAS curve shifts right to SRAS1 closing the gap at H.   c. In response to rising prices, firms will increase production moving along SRAS2 until long- run equilibrium is restored at J and the gap is closed.   d. Rising unemployment puts pressure on nominal wages to fall. Firms employ more workers moving along SRAS2 until long-run equilibrium is restored at J and the gap is closed.