Question

The Aggregate Demand – Aggregate Supply model (AD/AS) is a guide
for

policymaking. Explain, using an AD/AS model, the effect on the
aggregate

demand (AD) of expansionary monetary and fiscal policy. First draw
the

diagram and then explain the impact on aggregate demand (AD).

Answer #1

Explain and use an AS/AD diagram and a demand/supply diagram for
the Canadian dollar to illustrate how the Bank of Canada can
eliminate an inflationary gap with monetary policy. Note in the
AS/AD diagram you do not need to draw the multiplied (AD +/- ∆E)
aggregate demand curve. Be sure to address the impact of monetary
policy on all components of AD except for G.
Explain and use an AS/AD diagram and a demand/supply diagram for
the Canadian dollar to...

Show on graph (using the aggregate demand and aggregate supply
model) the effects of: An expansionary fiscal policy (reduction in
taxes or increase in government spending) trying to stimulate the
economy to get it out of the recession.

Using the aggregate demand and aggregate supply model, show and
explain what shifts in AD and AS resulted in the changes in prices
and output that occurred during World War II in the U.S.
The oil crisis began in October 1973 when the members of the
Organization of Arab Petroleum Exporting Countries proclaimed an
oil embargo. The embargo was targeted at nations perceived as
supporting Israel during the Yom Kippur War. Using AD-AS graphs,
show and explain the effect of...

Based on the Aggregate Supply and Aggregate Demand model, and
the IS-LM model, graphically illustrate and explain what effect an
increase in the money supply will have on the economy. In your
graphs, clearly illustrate the short-run and medium-run
equilibria.
Draw both the IS-LM and the AD-AS models.

2. Aggregate demand
a. Write down the AD relation.
b. Use the IS-LM model to derive the AD curve. What could cause
the shift of AD curve?
3. Monetary expansion
a. Assume the economy is initially at Yn. Draw the AD-AS model
and label the initial equilibrium as A. Draw the corresponding
IS-LM model and indicate the equilibrium A.
b. Suppose now there is a monetary expansion. Show the short run
effect on price level, output, and interest rate in...

Using an aggregate supply and aggregate demand model
illustrate and explain the effect of a significant increase in
technological innovation.

Equilibrium is where aggregate supply meets aggregate demand.
Suppose the equilibrium is in the vertical part of the aggregate
supply curve. What is the economic result of expansionary
policies?
A. Fiscal policy will be more effective in increasing
output.
B. Monetary policy will be more effective in increasing
output.
C. Both monetary and fiscal policies will only cause prices to
increase.
D. Fiscal and monetary policy will be equally effective in
increasing output.

consider the macroeconomic AD-AS model with an aggregate demand
curve and a short-run aggregate supply curve. assume that changes
in national output also represent changes in real GDP.
a. use the AD-AS model to explain and illustrates the
differences between demand-side measures and supply-side measures
and give an example of each. you also need to mention which markets
are embedded within each curve.
b. use the AD-AS model to analyse and illustrate the short run
impact of an increase in...

1) Draw a generic Aggregate Supply (AS) and Aggregate Demand
(AD) curve on a set of axes. Label your vertical axis and your
horizontal axis appropriately and indicate where the macroeconomic
equilibrium is.
(2) Then find a current events article that discusses some
macroeconomic event that will affect either AS or AD. Represent
this effect using a rightward or leftward shift as appropriate.
(3) Interpret the effect on the price level, output, and
unemployment in the context of your model...

Define and explain the crowding out effect. How does it impact
the aggregate demand/aggregate supply model? Be specific

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