Question

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 perfect weather leads to record harvests of wheat.
a. What happens to price levels and output in Australia in the short run?
b. Suppose the government takes on action to help the economy. Show 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 actions would you recommend? Why?
d. If the Australia government makes the appropriate policy response, what happens to price levels and output in the long run?
N.B. Use diagram to explain your ansert.

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

1. Covid - 19 had slowed down the global economy. In a situation like this, government should use expansionary fiscal policy to increase real output of the economy. This expansionary fiscal policy can be enacted either by cutting taxes (tax cut increases personal disposable income. This will increase consumption and investment spending. Therefore Aggregate demand will increase), or by increasing government spending. Government can also use both policies (cutting taxes and increase government spending) at the same time to boost aggregate demand.

This expansionary fiscal policy will shift the aggregate demand curve rightward. As a result, both equilibrium price level and real GDP goes up.

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
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...
2.    We now want to study the same fiscal policy if the economy starts at full...
2.    We now want to study the same fiscal policy if the economy starts at full employment. (i)            Draw the aggregate demand curve and the short and long run supply curves for a country in a new diagram. Assume that the country starts at full employment. (ii)           The government decides to reduce taxes to households. Illustrate in your diagram the effect on the economy of lower taxes by shifting the curve(s). Mark the new short-run equilibrium after lower taxes P2,...
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
The economy is in long-run equilibrium. Congress's passage of new laws significantly increasing the regulation of...
The economy is in long-run equilibrium. Congress's passage of new laws significantly increasing the regulation of business. It is assumed that everything else stays constant. What do we expect in aggregate demand, short-run aggregate supply, and long-run aggregate supply in the short-run? Explain what happens to short-run equilibrium price level and output And what happens in the long run, and long-run equilibrium price level and output? Explain your answer
The recession has meant that the actual output of the Australian economy is below the potential...
The recession has meant that the actual output of the Australian economy is below the potential output. The government has already introduced policy measures as you have identified above to boost aggregate demand (AD) and cover the output gap. However, from lecture 7 (Chapter 15) we can conclude that the road to economic recovery in Australia and mitigating the current output gap also requires policies to shift the short-run aggregate supply (SRAS) to the right. Discuss two of the distinct...
3. The recession has meant that the actual output of the Australian economy is below the...
3. The recession has meant that the actual output of the Australian economy is below the potential output. The government has already introduced policy measures as you have identified above to boost aggregate demand (AD) and cover the output gap. However, from lecture 7 (Chapter 15) we can conclude that the road to economic recovery in Australia and mitigating the current output gap also requires policies to shift the short-run aggregate supply (SRAS) to the right. Discuss two of the...
Suppose that a decrease in the demand for goods and services pushes the economy into recession....
Suppose that a decrease in the demand for goods and services pushes the economy into recession. Assuming policymakers do nothing, what happens to the price level, output, and unemployment in the short run? What ensures that the economy still eventually gets back to the natural rate of output? What happens to price-level, output, and unemployment in the longrun? Use an appropriately labeled AD-SRAS-LRAS diagram to help explain your answer.
An increase in aggregate demand (AD) can cause a recession in the economy. an increase in...
An increase in aggregate demand (AD) can cause a recession in the economy. an increase in cyclical unemployment. an expansion in the economy. Flag this Question Question 22 pts Economic growth is shown in the AS-AD model as a leftward shift in the short run AS curve. rightward shift in the AD curve. rightward shift in the long run AS curve. Flag this Question Question 32 pts In the long run, the most important factor that shifts the aggregate supply...
If the economy is in a recession caused by lower aggregate demand, then in the absence...
If the economy is in a recession caused by lower aggregate demand, then in the absence of policy action, the price level will __________, output will __________, and employment will __________ in the long run. increase; remain unchanged; increase remain unchanged; increase; increase decrease; increase; increase decrease; decrease; increase increase; increase; increase
Suppose the economy is initially in long-run equilibrium. Then, suppose a new technology is introduced that...
Suppose the economy is initially in long-run equilibrium. Then, suppose a new technology is introduced that boots productivity across key strategic sectors in the economy. According to the model of aggregate demand and aggregate supply, what happens to prices and output in the short run?                         a- Prices rise and output falls.                         b- Prices fall and output falls.                         c-Prices fall and output rises.                         d- Prices rise and output rises.
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT