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- Illustrate each of the following situations with a graphshowing AS and AD curves, and explain what happensto the equilibrium values of the price level and aggregateoutput:a. A decrease in G with the money supply held constant bythe Fedb. A decrease in the price of oil with no change ingovernment spendingc. An increase in Z with no change in governmentspendingd. An increase in the price of oil and a decrease in GO upp.eduiastic.com/student/ássessment/6081aea8213e430008f3ad18/class/611d518243c10fo0099843cf/uta/619b8b17a411c ols.org bookmarks e Your Eighty Dollar…. sds Question 22/28 > NEXT I BOOKMARK Supply-side egonomists argue that Supply and secure economic prosperity. on businesses (or producers) are the surest way to increase Aggregate A Tax cuts B Tax increases Spending cuts D Spending increases DELL & 7 8 9. 1 4. W e r y W # 个You have been hired as a Marco Economist by the President of the United States to help evaluate the recentannouncement by Federal Reserve chairman Ben Bernanke that the FED will be increasing interest rates again.Ben Bernanke has justified the move on the grounds that the economy continues to be strong. Answer thefollowing questions. Provide a graphical explanation for your answers whenever possible. 1. What is the fed trying to do?A. slow down the economyB. stimulate the economyC. remains unchanged 2. How is the fed doing it?A. buying bondsB. selling bondsC. remains unchanged 3. What happens to bond prices?A. increaseB. decreaseC. remains unchanged 4. What happens to the interest rate?A. increaseB. decreaseC. remains unchanged
- Theshortrunaggregatesupplycurvewasconstructedassumingthatasthepriceofoutputsincreases,thepriceof inputs stays the same. How would an increase in the prices of important inputs, like energy, affect aggregate supply?befoe y ee nd My a PRAS P feyr Output Reset In 6-2 we studied how unantioipated infation might affect the supply of goods and services in the economy and construced the shon-un aggregate supply ourve The interactive above shows how the SRAS curve changes at different levels of price fexibility. R is helptu in anowering the tulowing questions According to the SRAS curve, f prices are prefecty fexible O Unexpected changes in the price level wil have a large effect on output. O Unexpected changes in the price level will have no etfect on output O Unexpected changes in tme price level will have some etfect on output O None of these Inflation rateThe government of Australia has embarked on various policies such as Job Keeperand provision of subsidies to firms in order to reduce the severity of COVID 19 on theeconomy. Suppose the money supply expands such that the Reserve Bank predictsthat the economic expansion is not sustainable.Use two diagrams one for the money market and another for the goods and services(Aggregate demand and Aggregate Supply model), to explain the policy that theReserve Bank can adopt in order to overcome the effect of increasing money supplyon the economy.Assume that: money supply increased from the equilibrium of AUD 40 billion to AUD 70billion Interest was reduced to interest rate of 1.5% as part of the stimulus packagefor the nation to overcome the effects of COVID 19. But the equilibrium interestrate is 4% Assume that equilibrium real GDP is AUD 60 billion Assume that inflation during COVID crisis was at equilibrium price of CPI 65 Assume that to overcome the inflationary crisis aggregate demand…
- 7:511 Price level LRAS SRAS AD Real GDP 33) Refer to Figure 15-6. In the figure above, if the economy is at point A, the appropriate monetary policy by the Federal Reserve would be to lower tax rates. B) raise interest rates. c) lower interest rates. D) raise income taxes. 241 Whirh of the frllnwinn dacrihac what the Fard B I U west the a q w er ty uio p a s dfghjk I z x c v b n m 123 space return !!Consider an economy with the following aggregate demand (AD) and aggregate supply (AS) schedules. These schedules reflect the fact that, prior to the period we're examining, deci- sion makers entered into contracts and made choices antici- 105* pating that the price level would be P. SRAS 105 (IN TRILLIONS) AD105 PRICE LEVEL (In TRILLIONS) 95 $3.5 $5.1 4.9 100 3.8 4.7 105 4.2 4.5 110 4.5 4.3 115 4.8 a. Indicate the quantity of GDP that will be produced and the price level that will emerge during this period. b. Is the economy in long-run equilibrium? Why or why not? c. How will the unemployment rate during the current period compare with this economy's natural rate of unemployment?The short run aggregate supply curve was constructed assuming that as the price of outputs increases, the puce of inputs stays the same. How would an increase in the prices of important inputs, like energy, affect aggregate supply?