Recent economic reports forecast an increase in the interest rate, which likely increases households' desire to save more and decreases business willingness to invest. Use the AD/AD model to show the effects of an increase in the interest rate on the equilibrium Real GDP and Price index?
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Recent economic reports
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- Some politicians have suggested tying the minimum wage to the consumer price index (CPI). Using the AD/AS diagram, what effects would this policy most likely have on output, the price level, and employment?If new government regulations require firms to use a cleaner technology that is also less efficient than what they previously used, what would the effect be on output, the price level, and employment using the AD/ AS diagram?The government announces a cut in the income tax rate. Use the AD/AS model to analyse the short-run effects of this policy on GDP and the price level in the economy.
- Use the AD/AS model to explain the likely short run impacts on US GDP and the aggregate price level. What do you anticipate will happen to US consumption expenditure and US employment?Where does GDP fit into an AD/AS model?What impact would a decrease in the size of the labor force have on GDP and the price level according to the AD/AS model?
- Using the AD/AS model, what would be an explanation for observing an increased price level and a decreased real GDP? wages have increased. the money supply has decreased. productivity has increased. the money supply has increased.Using the AD/AS model, what would be an explanation for observing an increased price level and a decreased real GDP? Group of answer choices wages have increased. productivity has increased. the money supply has increased. the money supply has decreased.Suppose concerns about the size of the federal budget deficit lead the U.S. Congress to cut all funding for research and development for ten years. Assuming this has an impact on technology growth, what does the AD/AS model predict would be the likely effect on equilibrium GDP and the price level?
- Use AD/AS model to solve the following problems. You have to DRAW and explain AD/AS model. Hydraulic fracturing ( fracking) has the potential to significantly increase the amount of natural gas produced in the United States. Assume a large percentage of factories and utility companies use natural gas. Scenario A: the economy is operating at full employment level of output. Scenario B: The economy is operating below full employment. what will happen to output, the price level, and employment as fracking becomes more widely used? LO1: Analyze the dynamic economic environment using economic notions and theories. LO2: Explain consumer and producer behavior and economic decision-making of economic units under different market structures. LO3: Describe and interpret measures of macroeconomic performance including potential efficiencies, government actions, and market forces.The graph below shows the AD-AS diagram for the US. How big is the inflationary gap?In 2014, China’s economy slowed significantly causing a decrease in demand for US exports. Use the AD/AS model to explain the likely short run impacts on US GDP and the aggregate price level. What do you anticipate will happen to US consumption expenditure and US employment? Please explain your reasoning for each of your predictions and show graphically as appropriate.