Economics (7th Edition) (What's New in Economics)
7th Edition
ISBN: 9780134738321
Author: R. Glenn Hubbard, Anthony Patrick O'Brien
Publisher: PEARSON
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Question
Chapter 27, Problem 27.3.4PA
Subpart (a):
To determine
The GDP .
Subpart (b):
To determine
The GDP.
Subpart (c):
To determine
The GDP.
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Students have asked these similar questions
You read the following headline in the newspaper: "Following an expansion of military efforts, the
consumer price index increased by 5% in the past year."
Please assess if
(a) this is fiscal or monetary policy
(b) the policy is contractionary or expansionary
(c) GDP will increase or decrease
(d) Unemployment will increase or decrease
This is
Write your response here...
(fiscal/monetary) policy. This policy is
Write your response here...
(expansionary/contractionary). It will lead to a(n) Write your response here...
(increase/decrease) of
GDP while unemployment will tend to Write your response here...
(increase/decrease).
The graph below depicts an economy where an increase in aggregate demand has caused Inflation. Assume the government decides
to conduct fiscal policy by changing taxes to bring Inflation under control.
Price Level
160
150
140
130
120
110
100
90
80
70
60
50
Fiscal Policy
LRAS
AS
Real GDP (billions of dollars)
AD₁
AD
40
80 160 240 320 400 480 560 640 720 800
Instructions: Round your answers to 2 decimal places. If you are entering a negative number include a minus sign.
a. How much does aggregate demand need to change to restore the economy to its long-run equilibrium?
billion
b. If the MPC is 0.75, how much do taxes need to change to shift aggregate demand by the amount you found in part a?
$
billion
Suppose Instead that the MPC is 0.5.
c. How much does aggregate demand and taxes need to change to restore the economy to its long-run equilibrium?
Aggregate demand needs to change by $ billion and taxes need to change by $
billion.
The economy goes into recession. Which of the following lists contains things policymakers could do to try to end the recession?
a. Increase the money supply, increase taxes, decrease government spending
b. Decrease the money supply, increase taxes, decrease government spending
c. Increase the money supply, increase taxes, increase government spending
d. Increase the money supply, decrease taxes, increase government spending
Chapter 27 Solutions
Economics (7th Edition) (What's New in Economics)
Ch. 27.A - Prob. 1PACh. 27.A - Prob. 3PACh. 27.A - Prob. 4PACh. 27.A - Prob. 5PACh. 27 - Prob. 27.1.1RQCh. 27 - Prob. 27.1.2RQCh. 27 - Prob. 27.1.3RQCh. 27 - Prob. 27.1.4PACh. 27 - Prob. 27.1.5PACh. 27 - Prob. 27.1.6PA
Ch. 27 - Prob. 27.1.7PACh. 27 - Prob. 27.2.1RQCh. 27 - Prob. 27.2.2RQCh. 27 - Prob. 27.2.3PACh. 27 - Prob. 27.2.4PACh. 27 - Prob. 27.2.5PACh. 27 - Prob. 27.2.6PACh. 27 - Prob. 27.2.7PACh. 27 - Prob. 27.2.8PACh. 27 - Prob. 27.3.1RQCh. 27 - Prob. 27.3.2RQCh. 27 - Prob. 27.3.3PACh. 27 - Prob. 27.3.4PACh. 27 - Prob. 27.3.5PACh. 27 - Prob. 27.3.6PACh. 27 - Prob. 27.4.1RQCh. 27 - Prob. 27.4.3RQCh. 27 - Prob. 27.4.4PACh. 27 - Prob. 27.4.5PACh. 27 - Prob. 27.4.6PACh. 27 - Prob. 27.4.7PACh. 27 - Prob. 27.4.8PACh. 27 - Prob. 27.4.9PACh. 27 - Prob. 27.5.1RQCh. 27 - Prob. 27.5.2RQCh. 27 - Prob. 27.5.3PACh. 27 - Prob. 27.5.4PACh. 27 - Prob. 27.5.5PACh. 27 - Prob. 27.5.6PACh. 27 - Prob. 27.5.7PACh. 27 - Prob. 27.6.1RQCh. 27 - Prob. 27.6.2RQCh. 27 - Prob. 27.6.3RQCh. 27 - Prob. 27.6.4RQCh. 27 - Prob. 27.6.5PACh. 27 - Prob. 27.6.6PACh. 27 - Prob. 27.6.7PACh. 27 - Prob. 27.6.9PACh. 27 - Prob. 27.6.10PACh. 27 - Prob. 27.6.11PACh. 27 - Prob. 27.7.1RQCh. 27 - Prob. 27.7.2RQCh. 27 - Prob. 27.7.3RQCh. 27 - Prob. 27.7.4PACh. 27 - Prob. 27.7.5PACh. 27 - Prob. 27.7.7PACh. 27 - Prob. 27.7.8PACh. 27 - Prob. 27.1CTE
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Similar questions
- Use the chart to answer the following question. Fiscal Policy Government Spending Taxes increase increase B decrease decrease increase decrease D decrease increase Which of the following is an appropriate fiscal policy if the economy is experiencing an increase in price level?arrow_forwarda. What are the fiscal policy tools the government can use to expand an economy that is in a recession? Explain the interaction between monetary and fiscal policy?b. Explain how monetary policy is expected to affect investment and aggregate expenditure and discuss its connection with interest rates and output?arrow_forwardFiscal and Monetary Policy Assignment When the economy gets into serious problems, the government has two policies that offer the potential to get us back to equilibrium. Fiscal Policy works through government spending and taxes, while Monetary Policy works through the money supply. Read each scenario below and decide what the correct fiscal and monetary policy would be to correct the issue. 1. You read the following information on the economy. The economy has fallen into a recession. Use this information to do three things below: A. Draw an AS & AD graph that fits the details above. B. What is the corrective fiscal policy in this case?arrow_forward
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