Based on the figure above, an appropriate fiscal policy solution to move the economy towards full employment real GDP(Yf) is: expansionary fiscal policy O automatic fiscal policy contractionary fiscal policy O expansionary monetary policy
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- 12. Suppose Congress wishes to reduce the budget deficit by reducing government spending. Use the AS-AD model to show what the impact will be of this change on GDP.If the economy is in a recessionary period how, specifically, might the government use their three tools? three tools change the tax rate change the level of govertment spending change transfer paymentsCite the five major demand-side components of GDP. Then, identify the major elements affected by fiscal policy.
- Question 13/28 NEXT A BOOKMARK If inflation becomes too high, the government can use fiscal policy to slow the economy down some and help bring it down. This is an example of A Cautionary policy B Contractionary policy Expansionary policy D Deflationary policy DELL -> 女 #3 24 & 1 2 4. 6 7 8. W e r y 司The graph below depicts an economy where an increase in aggregate demand has caused inflation. Assume the government decides to conduct fiscal policy by changing taxes to bring inflation under control. Fiscal Policy 180 LRAS AS 160 140 120 100 AD, 80 60 AD 40 100 200 300 400 500 600 700 800 Real GDP (billions of dollars) istructions: Enter your answer as a whole number. If you are entering a negative number include a minus sign. Price LevelEconomics 1) Distinguish between discretionary and nondiscretionary fiscal policy. 2) Differentiate between expansionary and contractionary fiscal policy. 3) Plot the following markets on a graph: AD/AS graph: using 19.1 trillion for RGDP and 1.9% for inflation as point A (equilibrium). How will our AD/AS graph look like when U.S. government buys more military vessels (Shift the appropriate AD/AS curve on the graph)? 4) Plot the following markets on a graph: AD/AS graph: using 19.1 trillion for RGDP and 1.9% for inflation as point A (equilibrium). How will our AD/AS graph look like when Congress implements an income tax cut (Shift the appropriate AD/AS curve on the graph)?
- "Willam H. Branson" of "Macroeconomic Theory and policy" states that the "Fiscalist Model is an improbable, extreme case of the general model and not a stance to be taken seriously". However, the economic scenario during COVID 19 might indicate otherwise. Write an essay in about 500-600 words expressing your thoughts on this matter. Instructions: Please provide relevant statistics/data in order to substantiate your opinions.Q) In case of DEFLATION, mention that which particular type of fiscal policy will be used and why and either each fiscal policy tool will be increased or decreased. Explanation and reasoning for each tool and its working separately is must.The graph below depicts an economy where an increase in aggregate demand has caused inflation. Assume the government decides to conduct fiscal policy by decreasing government purchases to restore full-employment GDP. Price Level 180 160 140 120 100 80 60 40 20 0 Fiscal Policy LRAS AS AD AD, 100 200 300 400 500 600 700 800 900 1000 Real GDP (billions of dollars) Instructions: Enter your answer as a whole number. If you are entering a negative number include a minus sign. a. How much does aggregate demand need to change to restore the economy to its long-run equilibrium? $ (200) billion b. If the MPC is 0.75, how much does government purchases need to change to shift aggregate demand by the amount you found in part a? $ (50) → billion Suppose instead that the MPC is 0.6. c. How much does aggregate demand and government purchases need to change to restore the economy to its long-run equilibrium? Aggregate demand needs to change by $ (200) billion and government purchases need to change by…
- When the government increases spending (expansionary fiscal policy), inflation and employment are MOST LIKELY to change in which of the following ways? Inflation Level Unemployment Decrease, Increase Decrease, Decrease Increase, Decrease O Increase, IncreaseThe following graph shows the aggregate expenditures line (AE) for an economy where current equilibrium output is $400 billion and full-employment output is $650 billion. AGGREGATE EXPENDITURES (Billions of dollars) 800 700 600 500 400 300 200 100 0 0 100 45-degree line 200 300 400 500 600 REAL GDP (Billions of dollars). The economy is experiencing a require a s billion AE Full-employment GDP 800 700 AE ? billion. To close the GDP gap would GDP gap with the absolute value of the gap equal to s in government spending. Thus the spending multiplier for this economy is On the graph, shift the AE line to show the change in the aggregate expenditures line necessary to close the GDP gap.Question The rate of output and planned expenditures for the economy of Timbuktu are shown in the following table: Total Output Planned Aggregate Expenditures (Two-Sector Economy) (Real GDP in billion dollars) (in billions) 5,000 5,250 5,500 5,500 6,000 5,750 6,500 6,000 7,000 6,250 a) If the economy's full employment rate of output is $6.0 trillion, what will happen to the unemployment rate assuming that it will persist into the future? b) What would happen to the equilibrium level of output/income if there will be an autonomous increase in investment of $250 billion?