MACROECONOMICS FOR TODAY
10th Edition
ISBN: 9781337613057
Author: Tucker
Publisher: CENGAGE L
expand_more
expand_more
format_list_bulleted
Question
Chapter 16.A, Problem 14SQ
To determine
The Keynesian approach to the economic system.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
(i). Use the graph to explain national output equilibrium stability
(ii).Show and explain using the graph what would happen if there is a change any
components of aggregate demand
(iii).show and explain using the graph what would happen if there is a change any
components of autonomous aggregate demand
Now consider an economy in which the government lowers its spending. In the long run, the result would be _____________ in the price level and _____________ in real output.
an increase; an increase
a decrease; no change
a decrease; a decrease
None of the listed options is correct.
no change; a decrease
13 Which of the following would increase aggregate demand?
Increase in savings.
Increase in taxation.
Decrease in consumption spending.
Increase in government spending.
Chapter 16 Solutions
MACROECONOMICS FOR TODAY
Ch. 16.3 - Prob. 1.1YTECh. 16.3 - Prob. 2.1YTECh. 16.3 - Prob. 2.2YTECh. 16.A - Prob. 1SQPCh. 16.A - Prob. 2SQPCh. 16.A - Prob. 3SQPCh. 16.A - Prob. 4SQPCh. 16.A - Prob. 1SQCh. 16.A - Prob. 2SQCh. 16.A - Prob. 3SQ
Ch. 16.A - Prob. 4SQCh. 16.A - Prob. 5SQCh. 16.A - Prob. 6SQCh. 16.A - Prob. 7SQCh. 16.A - Prob. 8SQCh. 16.A - Prob. 9SQCh. 16.A - Prob. 10SQCh. 16.A - Prob. 11SQCh. 16.A - Prob. 12SQCh. 16.A - Prob. 13SQCh. 16.A - Prob. 14SQCh. 16.A - Prob. 15SQCh. 16 - Prob. 1SQPCh. 16 - Prob. 2SQPCh. 16 - Prob. 3SQPCh. 16 - Prob. 4SQPCh. 16 - Prob. 5SQPCh. 16 - Prob. 6SQPCh. 16 - Prob. 7SQPCh. 16 - Prob. 8SQPCh. 16 - Prob. 9SQPCh. 16 - Prob. 10SQPCh. 16 - Prob. 11SQPCh. 16 - Prob. 12SQPCh. 16 - Prob. 1SQCh. 16 - Prob. 2SQCh. 16 - Prob. 3SQCh. 16 - Prob. 4SQCh. 16 - Prob. 5SQCh. 16 - Prob. 6SQCh. 16 - Prob. 7SQCh. 16 - Prob. 8SQCh. 16 - Prob. 9SQCh. 16 - Prob. 10SQCh. 16 - Prob. 11SQCh. 16 - Prob. 12SQCh. 16 - Prob. 13SQCh. 16 - Prob. 14SQCh. 16 - Prob. 15SQCh. 16 - Prob. 16SQCh. 16 - Prob. 17SQCh. 16 - Prob. 18SQCh. 16 - Prob. 19SQCh. 16 - Prob. 20SQ
Knowledge Booster
Similar questions
- 7) Spending on the war in Afghanistan is essentially categorized as government purchases. How do increases in spending on the war in Afghanistan affect the aggregate demand curve? A) They will move the economy up along a stationary aggregate demand curve. B) They will move the economy down along a stationary aggregate demand curve. C) They will shift the aggregate demand curve to the right. D) They will shift the aggregate demand curve to the left.arrow_forward(1) Suppose the economy is in long-run equilibrium. If there is a sharp increase in the expected price level, what do we expect to happen? Select one: (A) In the short run, the SRAS curve will shift left, real GDP and price will fall. (B) In the short run, SRAS will shift right, real GDP will rise and prices will fall. (C) In the short run, AD will shift left, real GDP and prices will fall. (D) In the short run, LRAS and SRAS will shift left, causing real GDP to fall.arrow_forwardAs a result of a decrease in the value of the dollar in relation to other currencies, American imports decrease and exports increase. Consequently, there is a(n): a. decrease in the quantity of aggregate output supplied in the short run. b. increase in short-run aggregate supply. c. decrease in the quantity of aggregate output demanded. d. increase in aggregate demand.arrow_forward
- Question 15 Consider Figure 11.2. A shifting from point A to point C (AD1 to AD2) could be due to a (an) Price Level A$1 AS2 Figure 11.2 AD1 AD2 GDP increase in taxes. increase in money supply. decrease in government spending. decrease in confidence.arrow_forwardAssume the Canadian economy is currently at equilibrium. a. Using a correctly labeled aggregate demand and supply graph, show Full employment output (yf) Current price level (PL1) b. World War III breaks out and Canada has to get involved. The Prime Minister chooses to increase the military budget by 40%. On your graph from part A, show what will happen in the economy, labeling the new equilibrium as Q2, PL2. c. Using a correctly labeled graph of the loanable funds market, show how the Prime Minister’s decision will affect the economy.arrow_forwardAt a price level of 105, firms are unable to _______. A. meet the demand for their output, so they increase production and raise prices B. sell their output, so they cut production and aggregate supply decreases C. meet the demand for their output, so they increase production and aggregate supply increases D. sell their output, so they cut production and lower pricesarrow_forward
- (a) Suppose the price level in an economy rises while the money wage rate remains constant. What happens to the quantity of real GDP supplied. How will this affect the aggregate supply or aggregate demand curve? What if the potential GDP increases? Which aggregate curve is affected and how? (b) Planned Real GDP Consumption Investment $1,000 $100 1,900 100 2,800 100 3,700 100 $1,000 2,000 3,000 4,000 Government Purchases Net Exports $150 -$50 150 -50 150 -50 150 -50 From the table data provided, answer the following questions. The numbers in the table are in billions of dollars. Show all calculations. a. What is the equilibrium level of real GDP? b. What is the Marginal Propensity to Consume? c. What is the multiplier value in this economy? d. If potential GDP is $4,000 billion, is the economy at full employment? If not, what is the condition of the economy? e. If the economy is not at full employment, by how much should government spending increase so that the economy can move to the…arrow_forwardA) Discuss, with examples, factors or events that might shift the short run aggregate supply curve. B) Imagine an economy is in long run equilibrium. Now suppose that firms experience an increase in their cost of production (say, due to a natural disaster). i. Explain, with graphs, the macroeconomic impact of such an increase in production costs. ii. Describe how policymakers could use fiscal policy to counteract the effects of increased cost of production.arrow_forwardAccording to the Congressional Budget Office's projections, real GDP in 2007 was marginally higher than real potential GDP. If potential GDP is correctly assessed, then during that period : (A) the economy was on its long run aggregate supply curve. (B) the economy was to the left of its long run aggregate supply curve. (C) the economy was slightly to the right of its long run aggregate supply curve.arrow_forward
- The economy of Newland is in short-run macroeconomic equilibrium. The current real output is $400 billion, and the full employment output is $500 billion. The marginal propensity to consume is 0.8. (a) Is the economy experiencing a recessionary output gap or an inflationary output gap? Explain. (b) Assume Newland’s government is considering taking action to close the output gap identified in part (a). (i) Calculate the minimum change and indicate the direction of change in government spending required to shift the aggregate demand curve to close the output gap. Show your work. (ii) If instead Newland’s government changes income taxes without changing government spending, calculate the minimum change and indicate the direction of change in income taxes required to shift the aggregate demand curve to close the output gap. Show your work. (c) Which fiscal policy action, changing government spending or changing income taxes, is more effective in closing the output gap? Explain. (d)…arrow_forwardIf 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.arrow_forwardQuestion 28 In response to a negative supply shock, the government decreases taxes. The MOST likely result of the government's tax decrease is a(n) in unemployment and a(n) aggregate price level. in the decrease; increase decrease; decrease increase; increase increase; decreasearrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
