Asked by KidEnergy1012 on coursehero.com Use the graph to answer the question that follows. Suppose the demand for beef in the market changed due to a
sudden increase in chickens affected by bird flu in the country. Which point on the graph shows the new equilibrium price for beef? A. P1 B. P1 - P3 C. P2 D. P2 - P1 E. P3 What is the effect of the government increasing social welfare and the central bank buying securities on the output and employment of an economy? A. The output will be unaffected, and unemployment will decrease. B. The output will decrease, and
unemployment will also decrease. C. The output will increase, and unemployment will also increase. D. The output will increase, and unemployment will be unaffected. E. The output will increase, and unemployment will decrease. Use the following graph to answer the question that follows. Image transcription text Price Level SRAS X Y Real GDP... Which of the following represents the relationship between inflation and unemployment in the short run? A. Changes in the price levels do not motivate producers to change their production level. B. Higher price levels motivate producers to produce less, and that represents the inverse relationship between inflation and
unemployment. C. Higher price levels motivate producers to produce more, and that represents the inverse relationship between inflation and unemployment. D. Lower price levels motivate producers to produce less, and that represents the direct relationship between inflation and unemployment. E. Lower price levels motivate producers to produce more, and that represents the inverse relationship between inflation and unemployment. What is the maximum amount of possible loans that
banks are able to give out from any deposit? A. The excess reserve divided by the monetary base B. The excess reserve multiplied by the monetary base C. The excess reserve multiplied by the money multiplier D. The fractional reserve divided by the money supply E. The fractional reserve multiplied by money multiplier Which of the following is true about the long-run equilibrium in the economy? A. The long-run equilibrium occurs when the aggregate demand equals the long-run aggregate supply, irrespective of the changes in the short-run aggregate supply. B. The long-run equilibrium is attained at the intersection of aggregate demand and long-run aggregate supply. As the price adjusts to this level, the short-run aggregate supply also crosses this point. C. The long-run equilibrium is attained when the amount of aggregate supply exceeds the amount of long-run aggregate demand. D. The long-run equilibrium is attained when the amount of aggregate demand equals the amount of short-run aggregate supply, as the long-run aggregate supply does not depend on the immediate price level. E. The long-run equilibrium is attained when the amount of long-run aggregate supply equals the amount of aggregate demand, and the short-run aggregate supply remains unaffected, since the prices are sticky. If the marginal propensity to consume is .75 (or 75%), which of the following is true? A. The spending multiplier and the tax multiplier are both equal to 4. B. The spending multiplier will be 4, and the tax multiplier will be 5. C. A $100 increase in government spending could increase aggregate demand by a maximum of $300. D. A $50 increase in taxes could decrease aggregate demand by a maximum of $150. E. Equal increases in government spending and in taxes will reduce aggregate demand. The government of country B follows an expansionary fiscal policy by increasing government spending. What will the immediate (short-run) impact of such a move be on the foreign exchange rate? A. The currency of country B depreciates against the currency of other countries, due to a decrease in interest rates as a result of large government spending. B. The currency of country B appreciates against the currency of other countries, due to an increase in interest rates as a result of large government spending. C. The currency of country B appreciates against the currency of other countries, due to a decrease in interest rates as a result of large government spending. D. The currency of country B depreciates against the currency of other countries, due to an increase in interest rates as a result of large government spending. E. The currency of country B remains at the same value as against the currency of other countries, regardless of an increase in interest rates as a result of large government spending. Assume that an economy is using an expansionary fiscal policy and an expansionary monetary policy. Which of the following is true about the economy's situation? A. The economy has a decreased savings rate. B. The economy is experiencing a negative output gap. C. The economy is experiencing a positive output gap. D. The economy is operating at the full employment level. E. The economy is suffering from increased price levels. Which of the following is true about the monetary aggregate M2? A. M2 includes assets used directly for transactions. B. M2 includes M1 and near money. C. M2 is as liquid as the basic money supply. D. M2 is called narrow money. E. M2 is the sum of circulated currency and bank reserves. The graph below shows the changes in the money market due to an increase in the reserve requirement by the Fed. Image transcription text Nominal S'm Sm S"m interest rate % O' O" Dm m' m m" Quantity... Which point on the graph is the new point of equilibrium in the money market? A. m′ B. m″ C. o′ D. o″ E. r″ What is the effect of supply-side fiscal policies like decreasing taxes on investment, aggregate demand, and aggregate supply? A. The investment level in the economy decreases; aggregate demand increases; and aggregate supply increases. B. The investment level in the economy increases; aggregate demand decreases; and aggregate supply increases. C. The investment level in the economy increases; aggregate demand increases; and aggregate supply increases. D. The investment level in the economy increases; aggregate demand increases; and aggregate supply decreases. E. The investment level in the economy increases; aggregate demand remains unchanged; and aggregate supply decreases. Which of the following best explains why a monetary policy cannot help a country remove the inflationary gap in the economy? A. A crowding out effect reduces private investment. B. An increase in taxes discourages investment in the economy. C. An increase in the reserve ratio does not translate to changes in the interest rate quickly. D. Buying of securities leads to a decrease in the amount of credit in the economy. E. Government spends too much on the unnecessary areas. When the government borrows money to finance its deficit, how does the resulting change in private investment affect capital accumulation and economic growth in the long run? A. Physical capital accumulation decreases, and economic growth decreases. B. Physical capital accumulation decreases, and economic growth remains unaffected. C. Physical capital accumulation increases, and economic growth decreases. D. Physical capital accumulation increases, and economic growth increases. E. Physical capital accumulation remains unaffected, and economic growth decreases. Assume that an economy is going through a slump and is experiencing less than ideal output levels and a decreased national income. Which one of the following actions can a central bank take in order to fix the economy? A. The central bank advises the government to increase taxes. B. The central bank increases the discount rate for commercial banks. C. The central bank increases the reserve ratio of commercial banks. D. The central bank of the country buys securities via open market operations. E. The central bank of the country sells securities via open market operations. Use the graph to answer the question that follows. Image transcription text Price LRAS SRAS Level P E AD2 AD1 O Y Output... Assume that the economy is in the long-run equilibrium as shown on the accompanying graph. Which of the following best describes the self-correcting long-run adjustment if the economy had undergone a positive AD shock? A. Price will decrease, short-run aggregate supply will shift rightwards in order to bring back the economy to its long-run equilibrium. B. Price will increase, short-run aggregate supply will shift leftwards in order to bring back the economy to its long-run equilibrium. C. Price will increase, short-run aggregate supply will shift rightwards in order to bring back the economy to its long-run equilibrium. D. The interest rate will go down, increasing the investment, thus further increasing the aggregate demand to attain the equilibrium. E. The long-run equilibrium can only be attained again if the long-run aggregate supply curve shifts outwards. Suppose a closed economy has a national income of $260 million, $535 million in private savings, $200 million worth of tax revenue, and $150 million in government spending. What is the consumption expenditure in this economy? A. $125 million B. $155 million C. $385 million D. $585 million E. $645 million Equal decreases in both government spending and taxes will have what effect in the AD-AS framework? A. Aggregate demand will increase, and real GDP will increase. B. Aggregate supply will increase, and real GDP will increase. C. Aggregate demand will decrease, and unemployment will increase. D. Aggregate demand and aggregate supply will increase, with an indeterminate impact on the price level. E. Aggregate supply will decrease, and real GDP will decrease. Use the graph to answer the question that follows. Image transcription text S EO Real Interest Rate To D Fo Quantity of Loanable Funds ($)... Assume that the loanable funds market is in equilibrium, as shown in the graph. If households become concerned about retirement income and spend less, what will happen in this market for loanable funds? A. The demand for funds will increase, as will the equilibrium interest rate. B. Both the demand for funds and the supply of funds will decrease, with an indeterminate impact on the equilibrium interest rate. C. The demand for funds will decrease, and the equilibrium quantity of funds transacted will decrease below Fo. D. Both the demand for funds and the supply of funds will increase, with an increase in the quantity of funds transacted. E. The supply of funds will increase, and the equilibrium interest rate will fall below ro. What does a deficit in capital account reflect for a domestic country in the international market? A. A deficit in capital account shows that more money is coming into the country when compared to what it is spending. B. A deficit in capital account shows that more money is flowing out of the country when compared to what it is receiving. C. A deficit in capital account shows the net deficit in the country's balance of payment irrespective of the current account performance. D. The capital account is always balanced, so there can never be an economic condition that will create deficit. E. The deficit in the capital account pertains to more investment from the rest of the world than it does to the domestic country. If an economy is experiencing equilibrium in the loanable funds market with an 8% interest rate, what are the consequences if the interest rate falls to 6%? A. At lower interest rates, households will be willing to save more, and firms will be willing to invest more. B. At lower interest rates, households will be willing to save more, and firms will be willing to invest less. C. At lower interest rates, households will be willing to spend less, and firms will not be willing to invest more. D. At lower interest rates, households will be willing to spend less, and firms will be willing to invest more. E. At lower interest rates, households will be willing to spend more, and firms will be willing to invest more. Answered by intelligentmind on coursehero.com um dolor sit amet, consectetur adipiscing elit. Nam lacinia pulvinar tortor nec facilisis. Pellentesque dapibus efficitur laoreet. Nam risus ante, dapibus a molestie consequat, ultrices ac magna. Fusce dui lectus, congue vel laoreet ac, dictum vitae odio. Donec aliquet. Lorem ipsum dolor sit amet, consectetur adipiscing elit. Nam lacinia pulvinar tortor nec facilisis. Pellentesque dapibus efficitur laoreet. Nam risus ante, dapibus a molestie consequat, ultrices ac magna. Fusce dui lectus, congue vel laoreet ac, dictum vitae odio. Donec aliquet. Lorem ipsum dolor sit amet, consectetur adipiscing elit. Nam lacinia pulvinar tortor nec facilisis. Pellentesque dapibus efficitur laoreet. Nam risus ante, dapibus a molestie consequat, ultrices ac magna. Fusce dui lectus, congue vel laoreet ac, dictum vitae odio. Donec aliquet. Lorem ipsum dolor sit amet, consectetur adipiscing elit. Nam lacinia pulvinar tortor nec facilisis. Pellentesque dapibus efficitur laoreet. Nam risus ante, dapibus a molestie consequat, ultrices ac magna. Fusce dui lectus, congue vel laoreet ac, dictum vitae odio. Donec aliquet. Lorem ipsum dolor sit amet, consectetur adipiscing elit. Nam lacinia pulvinar tortor nec facilisis. Pellentesque dapibus efficitur laoreet. Nam risus ante, dapibus a molestie consequat, ultrices ac magna. Fusce dui lectus, congue vel laoreet ac, dictum vitae odio. Donec aliquet. Lorem ipsum dolor sit amet, consectetur adipiscing elit. Nam lacinia pulvinar tortor nec facilisis. Pellentesque dapibus efficitur laoreet. Nam risus ante, dapibus a molestie consequat, ultrices ac magna. Fusce dui lectus, congue vel laoreet ac, dictum vitae odio. Donec aliquet. Lorem ipsum dolor sit amet, consectetur adipiscing elit. Nam lacinia pulvinar tortor nec facilisis. Pellentesque dapibus efficitur laoreet. Nam risus ante, dapibus a molestie consequat, ultrices ac magna. Fusce dui lectus, congue vel laoreet ac, dictum vitae odio. Donec aliquet. Lorem ipsum dolor sit amet, consectetur adipiscing elit. Nam lacinia pulvinar tortor nec facilisis. Pellentesque dapibus efficitur laoreet. Nam risus ante, dapibus a molestie consequat, ultrices ac magna. Fusce dui lectus, congue vel laoreet ac, dictum vitae odio. Donec aliquet. Lorem ipsum dolor sit amet, consectetur adipiscing elit. Nam lacinia pulvinar tortor nec facilisis. Pellentesque dapibus efficitur laoreet. Nam risus ante, dapibus a molestie consequat, ultric  Unlock access to this and over Have an account? Log In Step-by-step explanationum dol What happens to GDP when government spending decreases?When government decreases its spending, it reduces aggregate demand, and causes some real GDP contraction. That contraction eliminates jobs, and less workers earn income. That reduction in income slows consumer spending, which reduces aggregate demand even more, and causes additional real GDP contraction.
What happens to real GDP when government purchases increase?An increase in purchases raises GDP because consumption and leisure decline, and the fall in leisure corresponds to a rise in labor input. The spending multiplier is less than one; that is, GDP rises by less than the increase in government purchases.
When Congress increases taxes does the equilibrium real GDP increase or decrease?Tax changes have very large effects: an exogenous tax increase of 1 percent of GDP lowers real GDP by roughly 2 to 3 percent.
Which of the following will most likely result from a decrease in government spending?The economy experiences increased interest rates due to reduced government spending, eventually causing inflation in the long run.
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Decreasing government spending ________ the price level and ________ equilibrium real gdp.
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