Question

4. Suppose a stock market crash reduces people’s wealth. a. Show what happens to price levels...

4. Suppose a stock market crash reduces people’s wealth.

a. Show what happens to price levels and output in Canada in the short-run.

b. Suppose the government takes no action to help the economy. What happens to price levels and output in the long-run?

c. Suppose, instead, the government decides to take action to help the economy. What action(s) would you recommend? Why?

d. If Canadian government makes the appropriate policy response, what happens to price levels and output in the long-run?

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

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
1. Covid-19 has slowed down the global economy. In a situation like this, as an advisor...
1. Covid-19 has slowed down the global economy. In a situation like this, as an advisor to the treasurer of federal government of Australia, advise the treasurer on what type of fiscal policy should be enacted? How would this be enacted via taxes? Through government spending What is the intended effect of this policy on aggregate demand? Diagram 2. What effect does rising business optimism and confidence have on the aggregate demand curve? Give examples. 3. Suppose a summer of...
Suppose the Canadian government decides it wants to use fiscal policy to increase output and employment....
Suppose the Canadian government decides it wants to use fiscal policy to increase output and employment. With the aid of diagrams, carefully explain whether and how an increase in government spending would shift the Aggregate Demand curve in a small open economy. a) with flexible exchange rates b) with fixed exchange rates. Suppose Canada is a small open economy initially in Long Run equilibrium. Then the rest of the world reduces its demand for Canadian-produced goods. Using the AD/AS framework...
1o. What happens in the long run, if the economy self adjusts, to: Output?____ Unemployment? _________...
1o. What happens in the long run, if the economy self adjusts, to: Output?____ Unemployment? _________ Price level? ___________ 1r. What policies could the government use to stabilize the economy? 1k. How would these policies work? 1s. What happens in the long run, if the government uses policy, to: Output?_________ Unemployment? _____________ Price level? _____________ 1t
4.For each of the following what kind of monetary policy do you suggest? What happens to...
4.For each of the following what kind of monetary policy do you suggest? What happens to output, unemployment and inflation in short run and long run if the monetary policy that you suggest has been taken? a. Government decides to take policy to reduce deficit. b. Construction workers goes on a strike for 2 months. c. US dollar depreciates with respect to euro d. People become more optimistic about the economy e. Productivity of U. S workers increase due to...
Consider the closed-economy model. (a) Use IS-LM and AD-AS diagrams to show what happens to the...
Consider the closed-economy model. (a) Use IS-LM and AD-AS diagrams to show what happens to the economy in the short-run, long-run, and during the transition, following an adverse supply shock . Explain in words what is happening. (b) Suppose the central bank wishes to achieve output stability; that is, suppose the central bank would like to keep Y from ever changing. In response to the change in P from the adverse supply shock, what, if anything, can the central bank...
1. Suppose the economy is hit by an unexpected oil price shock that permanently raises oil...
1. Suppose the economy is hit by an unexpected oil price shock that permanently raises oil prices by $50 per barrel. (This is a temporary increase in o¯ in the model: the shock o¯ becomes positive for one period and then goes back to zero.) (a) Using the full short-run model, explain what happens to the economy in the absence of any monetary policy action. i. How does the Phillips curve change? What happens to output and inflation? ii. How...
The economy initially starts in LRE. Canada enters a recession. Suppose the US government is influenced...
The economy initially starts in LRE. Canada enters a recession. Suppose the US government is influenced by Keyensian economic theory so it likes to actively manage business cycles. It decides to do fiscal policy. What could the US government could do which would be appropriate fiscal policy? ["Lower taxes and decrease government spending", "Raise taxes and decrease government spending", "Appreciate the currency", "Raise taxes and lower investment", "Lower taxes and increase government spending"]       Given that the US government...
First, watch the video "Inside the meltdown" Now let's use the AD/AS model you learned in...
First, watch the video "Inside the meltdown" Now let's use the AD/AS model you learned in chapter 10 to analyze the impact of the banking crisis on the macroeconomy.   1. First, assume that the economy was in a long-run equilibrium in spring 2008. Then, the financial turmoil started. Due to the bust of stock prices, consumer wealth declined, and consumer confidence dropped dramatically. What happened to aggregate demand? Illustrate your answer with a graph, and then explain verbally. 2. According...
1- Suppose a prolonged war in a country destroys its significant capital stock. In the long...
1- Suppose a prolonged war in a country destroys its significant capital stock. In the long run therefore. a) the price level will decrease as both long-run and short-run aggregate supply decrease. b) the price level will decrease as short-run aggregate supply decrease. c) the price level will remain unchanged as as both long-run and short-run aggregate supply decrease. d) the price level will increase as both long-run and short-run aggregate supply decrease. 2- Money eliminated the need for the...
1. In the short-run IS-LM model with income taxation, taxes are given by ?=? +??. Suppose...
1. In the short-run IS-LM model with income taxation, taxes are given by ?=? +??. Suppose that MPC = 0.75 and the marginal tax rate ?=0.2. Then, when ? decreases by 1000, then for any given interest rate, the IS curve shifts: Select one: a. to the left by 1000. b. to the right by 3000. c. to the right by 3750 d. to the right by 1875. 2. Suppose that the adult population in an economy is 28 million,...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT