Question

1. Suppose you’re looking at data for nominal GDP and you see that nominal GDP increased...

1.

  • Suppose you’re looking at data for nominal GDP and you see that nominal GDP increased for the last 10 straight years. Would you conclude that the economy was necessarily better off in each year? Why or why not?

2.

  • Suppose you are a policymaker and you want to increase GDP using fiscal and monetary policy to boost aggregate demand. How would you boost demand using fiscal policy? What about monetary policy? Explain exactly how you envision your policy working.
Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Ans

1 No because it might be simply due to rise in prices

2 By increasing Govt expenditure and/or reducing taxes. This will increase Aggregate demand which will inturn met by increase in quantity supplied. Thus Gdp rises. Monetary policy can be implemented by increasing money supply through purchasing securities in open market operations, reduce reserve requirements and reducing bank rates. These steps reduce cost of funds to banks which inturn decrease their own lending rates. Lower interest rates lead to more investment as interest rates and investment are inversely related. This leads to increase in Aggregate demand

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
2. Suppose a central bank has increased its nation’s nominal money supply considerably for several years...
2. Suppose a central bank has increased its nation’s nominal money supply considerably for several years in a row but without any increase in inflation. Over that same time, suppose its economy has not grown. Given this information, explain why this monetary policy has not yielded any results. Use the AD/AS model to aid in your answer and assume the economy is in a long-run equilibrium as your starting point. A good approach would be to compare what is supposed...
I. Completely answer the following problems:  uses the correct equations to explain the exercises, please 1. The...
I. Completely answer the following problems:  uses the correct equations to explain the exercises, please 1. The economy is in equilibrium of full employment at $ 825 billion. However, aggregate demand increases causing GDP to be at the level of $ 1,225 trillion. Note that the economy registers a PMC = 0.60. +a. What type of fiscal policy will have to be implemented (restrictive fiscal policy or expansive fiscal policy)? +b. If applying a fiscal policy using only government spending (G),...
1. Fiscal policy primarily affects macroeconomic equilibrium in the economy by Select one: a. changing the...
1. Fiscal policy primarily affects macroeconomic equilibrium in the economy by Select one: a. changing the Short-Run Aggregate Supply b. changing the Aggregate Demand c. changing the Long-Run Aggregate Supply d. all answers are correct 2. Suppose that the real GDP is $14 trillion, potential GDP is $16 trillion and taxes were cut by 500 billion to bring economy to the full employment. The implied value of the tax multiplier is Select one: a. 2 b. -4 c. 1.6 d....
rough Ideas of the questions and graphs please 1. Contrast the ideas of nominal and real...
rough Ideas of the questions and graphs please 1. Contrast the ideas of nominal and real GDP. Why is one more reliable than the other for comparing changes in the standard of living over a series of years? Use the concept of real and nominal GDP to compare the years 1980 and 2017. Which year was a better year for the economy and why? 2. What are the 4 phases of the business cycle? How long does a business cycle...
Suppose you put a policy in place that increases the tax on gas. How would you...
Suppose you put a policy in place that increases the tax on gas. How would you illustrate this policy decision using the Aggregate Demand and Aggregate Supply Model? How will the Price Level, Real GDP, and Employment be impacted in the short-run if this second most important policy decision was put into practice? How might the Price Level, Real GDP, and Employment be impacted in the long-run if this second most important policy decision was put into practice? Be detailed,...
Scenario: Suppose you are Economic Adviser in Ministry of financial affairs of a country named Vermoulli....
Scenario: Suppose you are Economic Adviser in Ministry of financial affairs of a country named Vermoulli. Your country is experiencing high rate of inflation. You have to prepare a report to present a solution for this situation to the Ministry of financial affairs-Vermoulli. You requested your friend (who is a Business graduate and have studied Macro Economics as one of his course) to prepare a template of the report. Your friend has prepared following template of the report, covering all...
Suppose U. S. nominal GDP increases from one year to the next year. Can you conclude...
Suppose U. S. nominal GDP increases from one year to the next year. Can you conclude that these figures present a misleading measure of economic growth? What alternative method would provide a more accurate measure of the rate of growth?
Suppose real GDP has increased by $100 million. At the same time, consumption expenditures rose by...
Suppose real GDP has increased by $100 million. At the same time, consumption expenditures rose by $90 million. This would imply that the marginal propensity to consume is.... Select one: a. 0.9 b. 0.8 c. 0.75 d. 0.6 If an increase in autonomous consumption spending worth $50 million results in a $400 million increase in equilibrium real GDP, then... Select one: a. the multiplier is 3.5 b. the multiplier is 8 c. the multiplier is 0.125 d. the multiplier is...
Is a recessionary or inflationary gap bad for an economy? Have you ever wondered how the...
Is a recessionary or inflationary gap bad for an economy? Have you ever wondered how the federal government and the Federal Reserve react to smooth out recessionary and inflationary gaps? In this activity, you will explore the concepts of fiscal policy and the attempts the U.S. government takes when the U.S. economy is in a recessionary or inflation gap. You will discuss the concepts of aggregate supply and aggregate demand to determine how the U.S. economy can work its way...
Instructions: 1.Pay attention to the different labels used in the charts. If you see an AD-AS...
Instructions: 1.Pay attention to the different labels used in the charts. If you see an AD-AS graph, that means you are to describe what happens in the US economy as a whole, or in the aggregate market, the market of ALL goods and services in the US. Unless noted otherwise, you are to describe both the short-run and long-run impacts. 2.On the other hand, if you see the regular S and D model, you are to describe the impact on...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT