An economy has: R = 10 +.ly, C= 14 +9YD, G= 25, 1 = 75 -r, NX = 30 – 06y - .5p, MD = .25y -r, MS = 15 and ASo = 2p. A negative AS shock occurs: AS = 2p – 60. %3D Provide a diagram showing AS/AD to illustrate how real GDP and the price level are affected by this a. AS shock. A government can offset this AS shock by increasing the money supply OR increasing government and the level of b. spending. They won't do both. Calculate level of money supply MS = government spending G= that would be necessary to offset this AS shock.
An economy has: R = 10 +.ly, C= 14 +9YD, G= 25, 1 = 75 -r, NX = 30 – 06y - .5p, MD = .25y -r, MS = 15 and ASo = 2p. A negative AS shock occurs: AS = 2p – 60. %3D Provide a diagram showing AS/AD to illustrate how real GDP and the price level are affected by this a. AS shock. A government can offset this AS shock by increasing the money supply OR increasing government and the level of b. spending. They won't do both. Calculate level of money supply MS = government spending G= that would be necessary to offset this AS shock.
Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter9: An Introduction To Basic Macroeconomic Markets
Section: Chapter Questions
Problem 3CQ
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Transcribed Image Text:An economy has: R = 10 +.ly, C= 14 + 9YD, G= 25, I = 75 -r, NX = 30 -.06y - .5p, MD = 25y-r, MS = 15
and ASo = 2p. A negative AS shock occurs: AS, = 2p – 60.
a. Provide a diagram showing AS/AD to illustrate how real GDP and the price level are affected by this
AS shock.
A government can offset this AS shock by increasing the money supply OR increasing government
spending. They won't do both. Calculate level of money supply MS=
b.
and the level of
government spending G =
that would be necessary to offset this AS shock.
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