The figure to the right shows an economy in an initial long-run equilibrium at point A a. Using the line drawing tool, show how, if at all, the equilibrium real GDP and the long-run equilibrium price level are affected by an income tax rebate (the return of previously paid taxes) from the government to households, which they can apply only to purchases of goods and services. Properly label this line. Carefully follow the instructions above, and only draw the required objects b. According to your graph, the equilibrium price level while the equilibrium real GDP

The figure to the right shows an economy in an initial long-run equilibrium at point A a. Using the line drawing tool, show how, if at all, the equilibrium real GDP and the long-run equilibrium price level are affected by an income tax rebate (the return of previously paid taxes) from the government to households, which they can apply only to purchases of goods and services. Properly label this line. Carefully follow the instructions above, and only draw the required objects b. According to your graph, the equilibrium price level while the equilibrium real GDP

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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6. Why the aggregate supply curve slopes upward in the short run In the short run, the quantity of output that firms supply can deviate from the natural level output if the actual price level in the economy deviates from the expected price level. Several theories explain how this might happen. For example, the sticky-price theory asserts that the output prices of some goods and services adjust slowly to changes in the price level. Suppose firms announce the prices for their products in advance, based on an expected price level of 100 for the coming year. Many of the firms sell their goods through catalogs and face high costs of reprinting if they change prices. The actual price level turns out to be 90. Faced with high menu costs, and firms that rely on catalogs the firms that rely on catalog sales choose not to adjust their prices. Sales from catalogs will will respond by the quantity of output they supply. If enough firms face high costs of adjusting prices, the unexpected decrease…
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An economy is described by the following equations: C= 60 +0.75 (Y - T) IP= 100 G= 150 NX= 30 T= 180 Y*= 760 The multiplier in this economy is 4. a. Find a numerical equation relating planned aggregate expenditure to output. Instructions: Enter your response for mpc rounded to two decimal places. PAE= b. Construct a table to find the value of short-run equilibrium output. Instructions: If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. Planned aggregate Output Y expenditure (PAE) Y - PAE 620 720 820 920 1,020 Short-run equilibrium output is c. By how much would government purchases have to change in order to eliminate any output gap? By how much would taxes have to change? In order to eliminate any output gap, government purchases would have to be reduced by In order to eliminate any output gap, taxes would have to be increased by d. If Y*=856, then by how much would government purchases have to change in order to eliminate any…
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I need help to solve below homework : Suppose the following conditions are present in the economy : 1) Firms are facing lower-than normal sales and have reduced output. 2) There is an excess supply of labour and firms are starting to reduce their workforce. What will happen subsequently in the Economy overall and why?
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