MACROECONOMICS
14th Edition
ISBN: 9781337794985
Author: Baumol
Publisher: CENGAGE L
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- The short run aggregate supply curve was constructed assuming that as the price of outputs increases, the puce of inputs stays the same. How would an increase in the prices of important inputs, like energy, affect aggregate supply?arrow_forwardSuppose concerns about the size of the federal budget deficit lead the U.S. Congress to cut all funding for research and development for ten years. Assuming this has an impact on technology growth, what does the AD/AS model predict would be the likely effect on equilibrium GDP and the price level?arrow_forwardWhich of the following will NOT shift the ADT curve? O a. A rise in government spending O b. A rise in exports Ос. A rise in interest rates O d. A rise in consumer confidencearrow_forward
- Which of the following will NOT shift the ADTT curve? O a. A rise in consumer confidence O b. A rise in interest rates O c. A rise in government spending O d. A rise in exportsarrow_forward1Why low rate inflation is considered necessary for economic grwoth? Oa It does not affect the purchasing power of wages Ob. It indicates that the currency is in continuous demand by the people Oc taffects only the rich and not the poor Od itact as an incentive to boost in supply in the economy 2When the economy is in Keynesian macroeconomic equilibrium, planned investment is greater than actual investment. O a False O b. True 3Government fixes the floor and ceiling price which will not allow the producers to increase the price on their wish, this is a type of. O a Physical control called price pegging O b. Monetary policy control measures O. Physical control called price tagging Od. Fiscal policy control measures O e None 4Rising output coupled with falling prices is called stagflation O a. False O b. True 5The Value of marginal propensity to consume lies O a. O to 1 O b. Less than zero Oc -1 to 1 Od. Between O to 1 6The Central Bank way to control inflation is Oa Monetary policy…arrow_forwardAttempts Average / 2 5. The aggregate supply curve in the simple Keynesian model Complete the following statement to make it true. "In the AD-AS framework, the simple Keynesian model includes an aggregate supply curve that Natural Real GDP." until the economy reaches its slopes upward Under what condition will an increase in total spending lead to an equivalent increase in Real GD O When the economy is producing more than Natural Real GDP. O When the economy is producing at Natural Real GDP. O When the economy is producing less than Natural Real GDP. O When the aggregate supply curve is vertical. is horizontal is verticalarrow_forward
- Please help with this practice questionarrow_forwardAccording to Keynes, the government may fight unemployment by O raising its budget deficit O increasing the supply of money O through a rise in its spending and a cut in tax rates O all of the abovearrow_forwardWhat is your prediction for the economy when you observe that inventories are taking an unplanned dive? You predict that there will be OA. an expansion O B. a trough O C. a business cycle O D. a recessionarrow_forward
- The United States is very large and very diverse in terms of economy. For example,someone would argue that rural areas may face a recessionary gap whereas othershave reached the full employment level. What would be your recommendations tothe US President who tries to combat recession in rural areas of Indiana based onthe self-regulating mechanism? [1] Discuss the tools that will help him achieve thelong run equilibrium and [2] show the impact graphically using the AD-AS Model.arrow_forwardUsing AS and AD curves to illustrate, describe the effectsof the following events on the price level and on equilibriumGDP in the long run assuming that input prices fullyadjust to output prices after some lag:a. An increase occurs in the money supply above potentialGDPb. GDP is above potential GDP, and a decrease in governmentspending and in the money supply occursc. Starting with the economy at potential GDP, a war inthe Middle East pushes up energy prices temporarily.The Fed expands the money supply to accommodate theinflation.arrow_forward7:511 Price level LRAS SRAS AD Real GDP 33) Refer to Figure 15-6. In the figure above, if the economy is at point A, the appropriate monetary policy by the Federal Reserve would be to lower tax rates. B) raise interest rates. c) lower interest rates. D) raise income taxes. 241 Whirh of the frllnwinn dacrihac what the Fard B I U west the a q w er ty uio p a s dfghjk I z x c v b n m 123 space return !!arrow_forward
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