Macroeconomics
13th Edition
ISBN: 9781337617390
Author: Roger A. Arnold
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 9, Problem 3WNG
(a)
To determine
Estimate the self-regulation out of a recessionary gap.
(b)
To determine
Estimate the self-regulation out of an inflationary gap.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
If an economy suffers from a recession induced by weak aggregate supply, the AD-AS model predicts:
a. That the economy will selfdom return to the long-term potential level through successive shifts in the SRAS curve to the right, as real wages decrease over time to restore the natural level of unemployment.
b. That the economy will selfdom return to the long-term potential level through successive shifts in the SRAS curve to the right, as real wages increase over time to restore the natural level of unemployment.
c. That the economy will selfdom return to the long-term potential level through successive shifts in the AD curve to the right, as real wages decrease over time to restore the natural level of unemployment.
d. That the economy will selfdom return to the long-term potential level through successive shifts in the SRAS curve to the left, as real wages decrease over time to restore the natural level of unemployment.
Which of the following would NOT cause a shift in AD?
Select one:
a. A reduction in interest rates
b. A fall in the cost of production
c. A reduction in income tax
d. An increase in government spending
Which of the following could shift the DAD (dynamic AD) curve to the right, all else equal?
an increase in imports
a higher real interest rate
the Fed raising its target inflation rate
a decrease in home purchases
Chapter 9 Solutions
Macroeconomics
Ch. 9.1 - Prob. 1STCh. 9.1 - Prob. 2STCh. 9.1 - Prob. 3STCh. 9.2 - Prob. 1STCh. 9.2 - Prob. 2STCh. 9.2 - Prob. 3STCh. 9.3 - Prob. 1STCh. 9.3 - Prob. 2STCh. 9.3 - Prob. 3STCh. 9 - Prob. 1QP
Ch. 9 - Prob. 2QPCh. 9 - Prob. 3QPCh. 9 - Prob. 4QPCh. 9 - Prob. 5QPCh. 9 - Prob. 6QPCh. 9 - Prob. 7QPCh. 9 - Prob. 8QPCh. 9 - Prob. 9QPCh. 9 - Prob. 10QPCh. 9 - Prob. 11QPCh. 9 - Prob. 12QPCh. 9 - Prob. 13QPCh. 9 - Prob. 14QPCh. 9 - Prob. 15QPCh. 9 - Prob. 16QPCh. 9 - Prob. 17QPCh. 9 - Prob. 18QPCh. 9 - Prob. 1WNGCh. 9 - Prob. 2WNGCh. 9 - Prob. 3WNGCh. 9 - Prob. 4WNGCh. 9 - Prob. 5WNGCh. 9 - Prob. 6WNGCh. 9 - Prob. 7WNG
Knowledge Booster
Similar questions
- Suppose the economy begins with output equal to its natural level. Then there is an increase in the supply of money. What are the immediate effects of a reduction in income taxes on the position of the AD, AS, IS, and LM curves in the SR. Could you help me with my Macroeconomics assignment? Thanksarrow_forwardSuppose concerns about the size of the federal budget deficit lead theU.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 describes the way in which the self-correcting mechanism of the economy resolves the problem of a recessionary gap? a. The recessionary gap is cured by an increase in government purchases of goods and services, which implies a shift to the right of the AD curve until full employment equilibrium is reestablished b. The unemployment associated with a recessionary gap causes wages to fall, increasing Aggregate Supply and thus shifting the AS curve to the right until a full employment equilibrium is reestablished c. The unemployment associated with a recessionary gap causes a decrease in Aggregate Supply, shifting the AS curve to the left until full employment equilibrium is restored d. Both (a) and (b) are correct e. None of the abovearrow_forward
- Use the AD - AS model in the figure below to answer the following questions. Suppose the economy is currently experiencing an inflationary gap, without any government policy intervention, the economy would move from ◻ a) C to D b) B to A c) C to B d) A to E e) E to Aarrow_forwardThe figure to the right illustrates the dynamic AD-AS model. Suppose the economy is in equilibrium in the first period at point (A). In the second period, the economy reaches point (B). What policy would the federal government likely pursue in order to move AD₂ to AD2, policy and reach equilibrium (point C) in the second period? A. Increase government spending B. Open market purchase of government securities C. Increase taxes D. All of the above C GDP deflator 103 102 100 LRAS₁ LRAS2 OB с SRAS₁ SRAS2 AD2, (policy) AD1 14.34.4 14 Real GDP ($trillions) AD2arrow_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_forward
- Suppose that in 2008, Sanaton’s government increases taxes. Show how this event will change equilibrium output and price level by shifting either the SRAS or AD curve, and then answer the questions below. Did equilibrium output increase or decrease?Increase/Decrease Did equilibrium price increase or decrease?Increase/Decreasearrow_forwardConstruct the AD, SRAS, and LRAS curves for an economy experiencing (a) full employment, (b) an economic boom, and (c) a recession.arrow_forwardRead the following excerpts. Identify whether the policy action is fiscal or monetary and expansionary or contractionary. Draw and label the change that would occur on the AD/AS graph as a result of the policy action described in each. Identify what will happen as a result of the policy to the price level, employment, and real GDP. Excerpt from President Jimmy Carter’s televised speech delivered October 24, 1978 “Good evening. I want to have a frank talk with you tonight about our most serious domestic problem. That problem is inflation. Inflation can threaten all the economic gains we’ve made, and it can stand in the way of what we want to achieve in the future. This has been a long-time threat. For the last 10 years, the annual inflation rate in the United States has averaged 6-1/2 percent. And during the three years before my inauguration, it had increased to an average of 8 percent. If inflation gets worse, several things will happen. Your purchasing power will continue to decline,…arrow_forward
arrow_back_ios
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