The economy is in long run equilibrium. There is a positive AD shock in the short run, the government should then in the long run, the equilibrium price will _. Select one: a. do nothing; increases b. increase government spending; decrease c. decrease taxes; increase d. decrease government spending; decrease for macroeconomics
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- Explain why the following statements are false.a. “The aggregate-demand curve slopes downwardbecause it is the horizontal sum of the demandcurves for individual goods.”b. “The long-run aggregate-supply curve is verticalbecause economic forces do not affect long-runaggregate supply.”if the economy is below the full employment GDP, then Congress passes a gov. spending bill. What happens to the GDP and price level in the long run? please show with graph.If the government got rid of sales tax, how might this affect the market? shift AD to the right shift SRAS to the right shift AD to the left shift SRAS to the left
- By decreasing government spending and aggregate demand, the policy ________ the price level and ________ equilibrium real GDP, ceteris paribus. Select one: a. decreases; increases b. increases; decreases c. increases; increases d. decreases; decreasesThe following graph shows aggregate demand and short-run aggregate supply. 1.) Use the line drawing tool to show the effect of an increase in taxes. Properly label this line. 2.) Use the point drawing tool to show the new equilibrium price level and real GDP. Label this point 'B'. Carefully follow the instructions above, and only draw the required objects. C Price level A 0 Real GDP (Y) SRASO ADOWhat effect does an increase in government spending have on the aggregate demand curve in an economy? A. The aggregate demand curve shifts to the left. B. The aggregate demand curve becomes steeper. C. The aggregate demand curve shifts to the right. D. The aggregate demand curve becomes flatter.
- One way that the government can increase aggregate demand is by: A. reducing income taxes. B. increasing the interest rates. C. reducing government spending. D. increasing business taxes.If both aggregate supply and aggregate demand simultaneously increase, a. the price level and equilibrium real GDP will both remain unchanged. b. the price level will increase, but equilibrium real GDP will decline. c. equilibrium real GDP will increase, but we cannot predict what will happen to the price level. d. the price level will increase, but we cannot predict what will happen to equilibrium real GDP. e. the price level and equilibrium real GDP will both decline.What are the likely consequences of a government implementing a policy of austerity during a period of economic recession? A. It would stimulate economic growth by increasing consumer confidence. B. It would lead to a decrease in the unemployment rate. C. It would potentially deepen the recession by reducing overall demand. D. It would have no effect on the economy's performance.
- If the government increases expenditures on goods and services and increases taxation by the same amount, which of the following will occur? A. Aggregate demand will be unchanged. B. Aggregate demand will increase. C. Interest rates will decrease. D. The money supply will decrease.Which of the graphs represents the state of the economy before this pronouncement? Graph A Graph B True or False: President Roosevelt was trying to decrease aggregate supply. O True False2. How does each of the following affect the aggregate demand curve? a. Government spending increases. b. The amount of taxes collected decreases.