By decreasing government spending and aggregate demand, the policy ________ the price level and ________ equilibrium real GDP, ceteris paribus. Select one: a. decreases; increases b. increases; decreases c. increases; increases d. decreases; decreases

By decreasing government spending and aggregate demand, the policy the price level and equilibrium real GDP, ceteris paribus. Select one: a. decreases; increases b. increases; decreases c. increases; increases d. decreases; decreases

Macroeconomics

13th Edition

ISBN:9781337617390

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter8: Aggregate Demand And Aggregate Supply

Section: Chapter Questions

Problem 1WNG

See similar textbooks

Related questions

Q: 8. The American Recovery and Reinvestment Act of 2009 was an expansionary fiscal policy whose…

A: Fiscal Policies:- A government generally regulates the market through fiscal measures, the measures…

Q: Which of the following is an example of fiscal policy? a. Fighting the war on terror b. Giving…

A: "Since you have asked multiple questions, we will solve first question for you .. If you want any…

Q: Part III: Congress and the President also notice this slowdown in the economy and decides to take…

A: Here, it is given that Congress and the President notice a slowdown in the economy, which implies…

Q: Suppose that you are a member of the Council of Economic Advisers. The president has asked you to…

A: The COVID-19 has contributed to worsening economic conditions in the United States and around the…

Q: If inflation is a major issue in the economy, what would be the correct fiscal policy response from…

A: Government is a higher authority who makes rules and regulations to manage the market activities and…

Q: SRAS PL2 PL AD2 AD Y,Y2 REAL GDP The Aggregate Demand Model shows an increase in Aggregate Demand or…

A: The given figure shows the increase in aggregate demand. Prices and output are increased.

Q: Question 4 Fiscal Policy and ADAS (4 points) The following table has data on aggregate demand and…

A: Considering GDP in the horizontal axis and Price Level (PL) in the vertical axis, the graph is…

Q: Explain the reasons why lags in fiscal policy can create statements such as this: “The member of…

A: Fiscal policy refers to the one of the types of economic policies, which is implemented by the…

Q: 2. What is the largest component of the federal budget? A) Entitlements C) Defense B) Net interest

A: Since you have asked multiple question, we will solve the first question for you. If you want any…

Q: when responding to a recession, congress faces two chocies about its policy response. If you support…

A: Recession is an undesirable situation in which the gross domestic product of the economy declines…

Q: 1. Fiscal Policya. Assume the Economy has an inflationary gap with above average price level,…

A: a) Inflationary gap is said to exist when the real gross domestic product exceeds the maximum…

Q: QUESTION 7 IA IA AD Refer to the graph above. If the economy is at point B, the best government…

A: Here, the given graph shows the demand and IA curves to explain different level of income or output…

Q: DYNAMIC TAX SCORING—WHAT IS IT, AND WHO WANTS IT? Go to www.google.com and search for information on…

A: Dynamic scoring is an apparatus to give individuals from Congress the data they have to assess the…

Q: If the government were to increase income taxes, how would that affect output (RGDP) and the price…

A: Similarly, contractionary fiscal policy, dampens the output level in the short run. It shifts the…

Q: (c) The Bank of England has a target of keeping inflation at 2%. Central banks around the world that…

A: Since you have asked multiple question , we will solve the first question for you . If you want any…

Q: Our macroeconomic model suggests that after a decline in aggregate demand like that of 2007, the…

A: "GDP (gross domestic product) measures the value of all finished goods and services produced within…

Q: What are monetary, fiscal and growth and supply side policies. How can a government utilize fiscal…

A: The AD-AS model is the main crux when the government would decide on the quantity of the real GDP.…

Q: C = 450 + 0.4Y I = 350 G = 150 X = 70 Z = 35 + 0.1Y T = 0.15Y Yf = 1550 Q.2.6 Before the…

A: Gross domestic product (GDP) refers to the total value of all the final goods and services that…

Q: SRAS PL2 PL AD, AD Y, Y2 REAL GDP he Aggregate Demand Model shows an increase in ggregate Demand or…

A: In the given model Aggregate Demand is increasing. In an Expansionary Fiscal Policy, AD increases…

Q: Suppose the economy has unemployment level close to 15%. A proper fiscal policy might be which of…

A: Unemployment occurs when people who are able, willing and looking for jobs are unable to find jobs.…

Q: Fiscal policy is when changes are made toandto accomplish macroeconomic goals. Select an answer and…

A: Fiscal policy: These are the policy measures that are being introduced by the government of a…

Q: Choose the two methods with which the government can balance the federal budget. These two methods…

A: Budget refers to a legal document which is created either by the government or some other political…

Q: What specific fiscal policy tools would you use to stimulate aggregate demand and how? also include…

A: Fiscal policy tools use to stimulate aggregate demand:To stimulate the aggregate demand, the fiscal…

Q: C = 450+0.4y I = 350 G = 150 X = 70 Z = 35+0.1y T = 0.15y Yf = 1550 - Calculate the…

A: Answer: Given: C = 450+0.4y I = 350 G = 150 X = 70 Z = 35+0.1y T = 0.15y Yf = 1550 Calculation: (1).…

Q: Q2: g) Explain the prosperity and recession phase of business cycles. h) There are two fiscal…

A: Prosperity and recession are some of the phases in the business cycle. The prosperity phase occurs…

Q: Policy Failure Fiscal policies can work only if private enterprises respond to them in certain way;…

A: Fiscal policy is the policy of the government regarding financial matters such as the tax rate of…

Q: Which of the following Government agents are responsible for carrying out Fiscal Policy? Select an…

A: In Keynesian macroeconomics, aggregate demand plays a very important role. The change in aggregate…

Q: Using examples from 2008-currently, explain fiscal policy. In your answer be sure to include what…

A: Main objective of any economy is stabilisation, economic growth, employment generation and poverty…

Q: If the economy is in a recessionary period how, specifically, might the government use their three…

A: Recession is defined as a period of economic slow down. Recession is characterized by consequent…

Q: • S = -1250 + 0.4 Y, I= 750 – 1600i • Ms= 1100, Mt = 0.15Y and Mp = 0.10 Y • A. Calculate Y eq, S,…

A: Consumption expenditure refers to the amount of money consumers spend on goods and services, and…

Q: You are given the following data C=130+0.5 (1-t) Y (Consumption) T = tY (Tax revenue) (Investment)…

A: Given Information Consumption (C) = 130 + 0.5 (1-t)YTax Revenue (T) = tYInvestment (I) = 120Tax Rate…

Q: A: What are the three fiscal policy tools? B: How would change each tool if your goal was to…

A: Fiscal policy refers to changes in government purchases and taxes, which are intended to achieve the…

Q: 01. Which ff the following reasons why fine-tuning the economy is not likely to be successful, is…

A: In an economy, there are different types of economic lags that may arise when government tries to…

Q: Suppose the economy has unemployment level close to 15%. A proper fiscal policy might be which of…

A: Fiscal Policy involves use of government spending and taxation in order to influence the economy.…

Q: The task I am struggling with: The accompanying diagram shows the current macroeconomic situation…

A: Meaning of Fiscal Policy: The term fiscal policy refers to the situation under which the…

Q: The U.S. is in a recession due to decreased Aggregate Demand in the economy. Should the government…

A: When there is a financial crisis in the economy or a rise in interest rates, fall in the prices of…

Q: U.S. Congress Gives Final Approval to $787 Billion Stimulus Feb. 13 (Bloomberg)-The U.S. Congress…

A: The given value of MPC is 0.90. and; In first year, stimulate government spending is $185 billion.…

Q: Counter-cyclical fiscal policy works. If consumers and businesses lose confidence because of the…

Q: Compute the amount the government would have to increase spending to close the output gap according…

A: Fiscal policy is the use of government spending and taxation to influence the economy.. Fiscal…

Q: The accompanying diagram shows the current macro- economic situation for the economy of Albernia.…

A: a. Potential output : Yp Actual output : Y1 In the given diagram, actual output is lower than the…

Q: 14 MULTIPLE SELECT: If the government decides to pursue a expansionary policy, which of the…

A: An expansionary fiscal policy aims to increase the Aggregate demand by decreasing taxes and…

Q: Hello, I would like help on this assignment. Thank you. Fiscal Policy Assume the Economy has an…

A: (1)In economics, the term inflationary gap is a kind of situation where there exists a positive…

Question

By decreasing government spending and aggregate demand, the policy ________ the price level and ________ equilibrium real GDP, ceteris paribus.

Select one:

a. decreases; increases

b. increases; decreases

c. increases; increases

d. decreases; decreases

Definition Video Definition Overall monetary value of all the complete or final services and goods that a country can produce within its domestic boundaries in a specific period. Video

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

The following graph shows aggregate demand and short-run aggregate supply. 1.) Use the line drawing tool to show the effect of an increase in taxes. Properly label this line. 2.) Use the point drawing tool to show the new equilibrium price level and real GDP. Label this point 'B'. Carefully follow the instructions above, and only draw the required objects. C Price level A 0 Real GDP (Y) SRASO ADO
If the government increases expenditures on goods and services and increases taxation by the same amount, which of the following will occur? A. Aggregate demand will be unchanged. B. Aggregate demand will increase. C. Interest rates will decrease. D. The money supply will decrease.
A cut in personal taxes on households’ income: A shifts the aggregate demand curve to the left. B. shifts the aggregate demand curve to the right. C. moves the economy along the aggregate demand curve . D. has no effect.
If the price level rises and the money wage rate remains constant, what happens to the quantity of real GDP supplied? How does the economy move? If the price level rises and the money wage rate remains constant, the quantity of real GDP supplied _______ and there is a movement up along the _______. A. increases; aggregate supply curve B. increases; potential GDP line C. does not change; aggregate supply curve D. does not change; potential GDP line Thanks!!
If the price level rises and the money wage rate remains constant, what happens to the quantity of real GDP supplied? How does the economy move? If the price level rises and the money wage rate remains constant, the quantity of real GDP supplied _______ and there is a movement up along the _______. A. increases; aggregate supply curve B. increases; potential GDP line C. does not change; aggregate supply curve D. does not change; potential GDP line
During recessions, taxes tend to a. rise and thereby increase aggregate demand. b. fall and thereby decrease aggregate demand. c. fall and thereby increase aggregate demand. d. rise and thereby decrease aggregate demand.
If the government announces a decrease in spending with an increase in taxes, which of the following would most likely occur? a. a leftward shift of the aggregate demand curve b. a rightward shift of the aggregate demand curve c. an upward movement along the aggregate demand curve d. a downward movement along the aggregate demand curve e. no change in the aggregate demand curve as well as no movement along it
2. How does each of the following affect the aggregate demand curve? a. Government spending increases. b. The amount of taxes collected decreases.
When households cut back on their spending, then in the short run we tend to see the price level ______ and equilibrium output __________. fall; fall rise; fall rise; rise fall; rise
1. How is the aggregate demand curve different from the demand curve for a single good, like hamburgers?
Aggregate Supply and Aggregate Demand Real GDP Supplied Price $ 250 $ 500 $ 750 $1000 1500 3000 4500 4500 Real GDP Demanded 5500 5000 4500 4000 a. Plot the aggregate supply and aggregate demand curves on the same graph. b. State the equilibrium real GDP and price level. c. At the equilibrium GDP from part b, is the economy experiencing a recessionar gap? Explain why it is or is not experiencing a recessionary gap. d. State what happens to the nominal wages and the real wage in the short run phase of the aggregate supply.
Worksheet 5: Aggregate Supply and Aggregate Demand Complete the questions below. Be sure to show your work. Upload this worksheet to Moodle. Consider the following Aggregate Supply and Aggregate Demand curves. 2. 3. D P 10 8 6 4 2 20 AS/AD 40 LRAS 60 80 140 SRAS AD Name: 100 120 GDP 4. Suppose the government increased spending (G). What would happen to Aggregate Demand? Draw the resulting curve, and mark a new equilibrium on the graph.