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- Explain the effects of propensities, expectations and multipliers in causing a recession.What happens when firms and workers underestimate future prices in the economy? Explain the answer while focusing on what would happen to actual output as opposed to the expected potential output.How can shipping delays and shortages of intermediate goods cause a recession? Why may these issues lead to a reduction in consumer spending? Consider how consumers change the timing of their purchases to reflect the market.
- When an economy dips into a recession, consumers will often be relatively pessimistic about the future for an extended period time. How will this pesimism affect the speed and strength of the recovery?The consequences of climate change on the economy is a popular topic in the media. Suppose that a series of wildfires destroys crops in the western states at the same time a hurricane destroys refineries on the Gulf Coast. a) Using aggregate demand and supply analysis, explain how output and the inflation rate would be affected in the short and long runs. b) Show your answer graphically.Explain in details how high inflation can lead to a recession in several ways.
- Use an aggregate demand (AD) and aggregate supply (AS) model to respond to the following questions. Explain your answers.(c) Describe a government policy that is likely to cause non-inflationary and sustained growth. (d) Good weather creates a bumper crop in Saskatchewan. How does this affect inflation and GDP in the short-run?The consequences of climate change on the economy is a popular topic in the media. Suppose that a series of wildfires destroys crops in the western states at the same time a hurricane destroys refineries on the Gulf Coast. a) Using aggregate demand and supply analysis, explain how output and the inflation rate would be affected in the short and long runs. b) Show your answer graphically. Note: don't use chat gptWhat common rule of thumb do economists use to define a recession? A decline of 5% in GDP A decline of 10% in GDP One quarter of negative GDP growth Two quarters (six months)of negative GDP growth
- What are supply shocks? Why are policy choices hard when there are negative supply shocks? Would you model the pandemic of 2020 as a supply shock or a demand shock? Why?Research past recessions in the US economy. Analyze why the recessions occurred, the societal and economic impact of the recessions, and what policies were implemented due to recessions.Use an aggregate demand (AD) and aggregate supply (AS) model to respond to the following questions. Explain your answers. (a) Under what conditions does a reduction in Aggregate Demand benefit the economy? (b) Show how stagflation impacts the economy in the short-run.