Macroeconomics
13th Edition
ISBN: 9781337617390
Author: Roger A. Arnold
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 14, Problem 13QP
(a)
To determine
The liquidity effect.
(b)
To determine
The price-level effect.
(c)
To determine
The expectations effect.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Assume that the housing market is in equilibrium in year 1. In year 2, the mortgage rate that banks
charge consumers decreases, but producers are not affected. Which of the following is most likely to be
the equilibrium change?
Price
D.
Quantity
Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer.
The equilibrium will be at point C before the change in expectations and point A after the
a
change
The equilibrium will be at point A before the change in expectations and point B after the
b
change
The equilibrium will be at point A before the change in expectations and point C after the
change
The equilibrium will be at point E before the change in expectations and point C after the
d
change
[3 Fulls
40
la
Unexpectedly, the US government announced that it would be drastically reducing government spending in the coming months. How will this affect aggregate demand and interest rates?
a. Aggregate demand will shift right; interest rates will rise
b. Aggregate demand will shift right; interest rates will fall
c. Aggregate demand will shift left; interest rates will rise
d. Aggregate demand will shift left; interest rates will fall
How does aggregate demand affect inflation?
How do interest rates affect aggregate demand?
Chapter 14 Solutions
Macroeconomics
Ch. 14.1 - Prob. 1STCh. 14.1 - Prob. 2STCh. 14.1 - Prob. 3STCh. 14.2 - Prob. 1STCh. 14.2 - Prob. 2STCh. 14.3 - Prob. 1STCh. 14.3 - Prob. 2STCh. 14.3 - Prob. 3STCh. 14.4 - Prob. 1STCh. 14.4 - Prob. 2ST
Ch. 14.4 - Prob. 3STCh. 14 - Prob. 1QPCh. 14 - Prob. 2QPCh. 14 - Prob. 3QPCh. 14 - Prob. 4QPCh. 14 - Prob. 5QPCh. 14 - Prob. 6QPCh. 14 - Prob. 7QPCh. 14 - Prob. 8QPCh. 14 - Prob. 9QPCh. 14 - Prob. 10QPCh. 14 - Prob. 11QPCh. 14 - Prob. 12QPCh. 14 - Prob. 13QPCh. 14 - Prob. 14QPCh. 14 - Prob. 15QPCh. 14 - Prob. 16QPCh. 14 - Prob. 17QPCh. 14 - Prob. 18QPCh. 14 - Prob. 19QPCh. 14 - Prob. 1WNGCh. 14 - Prob. 2WNGCh. 14 - Prob. 3WNGCh. 14 - Prob. 4WNGCh. 14 - Prob. 5WNGCh. 14 - Prob. 6WNGCh. 14 - Prob. 7WNGCh. 14 - Prob. 8WNG
Knowledge Booster
Similar questions
- Which of the following expectations will NOT increase spending? a. Employment b. Laying off c. Maturity of Investment d. Promotionarrow_forward1. In macroeconomic, How expectations can play a role in shaping both consumption behavior and investment behavior.arrow_forwardHow does speculation (future expectations) affect aggregate demand? Explain your answer/s. Provide good economic basis.arrow_forward
- Consumer expectations about future income have become negative. How will this affect aggregate demand and equilibrium in the short run? A. Aggregate demand will fall, the equilibrium price level will fall, and the equilibrium level of GDP will fall. B. Aggregate demand will not change because consumer expectations are not a determinant of aggregate demand. C. Aggregate demand will fall, the equilibrium price level will rise, and the equilibrium level of GDP will fall. D. Aggregate demand will rise, the equilibrium price level will rise, and the equilibrium level of GDP will rise. E. Aggregate demand will rise, the equilibrium price level will fall, and the equilibrium level of GDP will rise. QUESTION 12 When aggregate supply shifts to the left, the equilibrium price level _____________ and the unemployment rate ______________ in the short run. A. falls; rises B. falls; falls C. falls; remains constant…arrow_forwardAssume the Bank of Canada conducts an open market purchase, which increases real GDP. What happens to the interest rate after both of these effects are taken into account when prices are held fixed? A) there is no change in the interest rate. B) the interest rate rises. C) the interest rate falls. D) the effect on the interest rate is ambiguous the answer was D. PLEASE EXPLAIN AND I WILL GIVE THUMBS UParrow_forwardHello, I need help with a macroeconomics question. Thank you in advance! The answers are based on a short exerpt from the Federal Reserves press release from Feb 1, 2023 (attatchde below). 7. What do you expect to happen to the money supply? 8. What do you expect to happen to the inflation rate? 9. How would you expect all these decisions to affect employment in the economy? 10. How do the effects you found on 8 and 9 align with what the Fed was hoping to attain?arrow_forward
- Suppose home owners owe $8 trillion in mortgage loans. a. If the mortgage interest rate is 4 percent, approximately how much are home owners paying in annual mortgage interest? $ billion b. If the interest rate drops to 3.5 percent, by how much will annual interest payments decline? $ billion c. How will this change in the interest rate impact aggregate demand? Aggregate demand will .arrow_forwardb) Now suppose that a stock market crash causes aggregate demand to fall. Use your diagram to show what happens to output and the price level in the short-run . What happens to the unemployment rate? C) Use the sticky-warge theory of aggregate supply to explain what will happen to output and the price level in the long run(assuming no change in policy).What role does the expected price level play in this adjustment? Be sure to illustrate your analysis in a graph.arrow_forwardSuppose there is a negative TFP shock caused by a coronavirus. a. In response to the pandemic, the Fed bought a large amount of U.S. Treasury bonds from the public. How does that affect the money supply, if at all? Explain. b. In the neoclassical model, would an increase in the money supply affect real output or employment? Explain.arrow_forward
- How can shipping delays and shortages of intermediate goods cause a recession? Why may these issues lead to a reduction in consumer spending? Consider how consumers change the timing of their purchases to reflect the market.arrow_forward1. A. Harold Hotelling forecast that someday the oil industry would come to an end. For the interim period, in between his time and the end of oil, what were Hotelling's expectations for (i) consumers, (ii) oil production investors, and (iii) oil prices? B. Marion King Hubbard forecast that the oil industry would continue to expand, and then shrink. What reasoning did Marion King Hubbert use to form his expectations? C. Contrary to the forecast of Harold Hotelling, today's global oil output is greater than ever. Nevertheless, what have top Middle East oil exporting nations do to apply Hotelling's expectations into their own national oil export policies? D. Also contrary to the beliefs of Marion King Hubbert, today's global oil output is greater than ever, rather than less. Even the USA's oil output is greater today than it was when Hubbert made his forecast. Nevertheless, what have the major oil exporters of the Arabian Gulf done in the past to apply Hubbert's forecasts into their…arrow_forwardWhat effects would each of the following have on aggregate demand or aggregate supply? In each case use a diagram to show the expected effects on the equilibrium price level and the level of real output. Assume all other things remain constant. a. The expectation of rapid inflation b. A 10 percent reduction in personal income tax rates c. A sizable increase in labor productivity (with no change in nominal wages) d. A 12 percent increase in nominal wages (with no change in productivity) e. Depreciation in the international value of the dollar.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning