Suppose that the government wants to raise investment but keep output constant. According to the IS-LM model, what mix of monetary and fiscal policy will achieve this goal? Explain your policy recommendations. Illustrate your policy bundle in the IS-LM model.

Assume the following to answer the following questions:  C= 1000+ .9 (Y-T) Tax rate = 0.1Y Imports = 0.1(Y-T) Government spending = 200 Investment = 300 Exports = 600 Potential Output = $8000 The economy described above is in the     ["recessionary", "inflationary"]  gap of the AD/AS Model.

During the current economic crisis caused by COVID 19, the Australian authorities have used both monetary and fiscal policy to try and minimise unemployment. (a) Use the dynamic AD-AS model to describe the impact of the crisis on the economy. Be sure to comment on its effect on both the demand and supply side in your answer. b) Using the same model, discuss and show in a diagram how the correct fiscal policy may offset the impact of the COVID effects on the economy. Be sure to mention any practical issues that may modify your answer

Show on a graph of the AS-AD model of the economy how different fiscal and monetary policies impact on the economy

In the AS/AD model, what are the main differences between the neoclassical perspective and the Keynesian perspective?

Contrast the effectiveness of fiscal policy in the AD-AS and IS-LM models.

From the perspective of someone using aggregate-demand and aggregate supplyanalysis, what is the impact of a tax cut when the economy is operating above fullemployment. Is this a wise policy? Why or why not?

In the new Keynesian view, the larger the proportion of firms in the economy with sticky prices the less effective is fiscal policy in increasing output. The steeper the SRAS curve will be. the greater the increase in the price level for a given shift in the AD curve. the flatter the SRAS curve will be.

According to Keynesian economics, what impact would a balanced budget amendment to the constitution requiring the federal government to balance its budget annually have on the economy?

Consider an economy currently in recession. Which is NOT a policy move that could assist the economy, as discussed in class? Raising the money supply Raising government spending Lowering bank reserves Lowering interest rates