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What is one way society can financially incentivize innovation?. What school of thought believes increasing AD can actually change output

Macroeconomics

13th Edition

ISBN:9781337617390

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter8: Aggregate Demand And Aggregate Supply

Section8.5: Long Run Aggregate Supply

Problem 1ST

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The government of Prime Minister Shinzo Abe said it would oﬀer some $15 billion in ﬁnancing for businesses hit by the novel coronavirus and spend about $4 billion directly to prop up the economy.“As the top priority for the time being, we have to put all our eﬀort into keeping businesses alive,” Mr. Abe said.Still, in a $5 trillion economy, the measures may not be big enough to dig the country out of a big hole. SMBC Nikko Securities economist Junichi Makino said he expected the Japanese economy to shrink at an annualized pace of 5.8% in the January-to-March period following a 7.1% contraction in the last quarter of 2019.Japan is set to oﬀer emergency no-interest loans of about $1,900 to newly jobless people and others in trouble, and the borrowers may not have to pay the money back if they can’t ﬁnd work. Businesses at risk from the virus can access ﬁnancing or loan guarantees from the government QUESTIONS: 1. How would the financing plan designed to supports businesses impact the…