Question
In: Economics
Why do price levels increase when government adopts fiscal or monetary policy to correct the economy...
Why do price levels increase when government adopts fiscal or monetary policy to correct the economy when it faces a recession and high unemployment?
Are there key differences between an increase in the capital stock and an improvement in the level of technology?
Solutions
Expert Solution
Answer - To remove the recession or the unemployment problem , the government or the fed adopts the expansionary fiscal or monetary policy. As the result of this policy , the money supply in the economy increases , the income of the public increases . This increase leads to the increase in the demand in the economy and demand curve shifts to right. As a result of this increase in demand , the price levels rise in the economy .
Answer 2 - Capital stock is the stock or we should say the assets of the enterprise . It is the machinery , equipments etc which the business owns through which the production is carried out.
Technological devepment is the development in this above explained capital stock. When the technological improvement takes place in capital stock then the prodictivity rises.
The capital stock may be obsolete and outdated. But when technological improvement takes place this stock gains more productivity or the new improved stock is added.
Rahul Sunny answered 1 year agoRelated Solutions
Should the government use monetary and fiscal policy in an effort to stabilize the economy?
27. Use of discretionary policy to stabilize the economy Should the government use monetary and fiscal policy in an effort to stabilize the economy? The following questions address the issue of how monetary and fiscal policies affect the economy and the pros and cons of using these tools to combat economic fluctuations. The following graph shows a hypothetical aggregate demand curve (AD), short-run aggregate supply curve (AS), and long-run aggregate supply curve (LRAS) for the U.S. economy in March 2020.Suppose the government...
Should the government use monetary and fiscal policy in an effort to stabilize the economy?
Should the government use monetary and fiscal policy in an effort to stabilize the economy? The following questions address the issue of how monetary and fiscal policies affect the economy, and the pros and cons of using these tools to combat economic fluctuations.The following graph shows a hypothetical aggregate-demand (AD) curve, short-run aggregate-supply (AS) curve, and long-run aggregate-supply (LRAS) curve for the Canadian economy in March 2023.Suppose the government decides to intervene to bring the economy back to the natural...
Aim: What can the government do to adjust the economy? Topic: Fiscal Policy Fiscal Policy: Government...
Aim: What can the government do to adjust the economy?
Topic: Fiscal Policy
Fiscal Policy: Government spending policy (passed by
Congress). This is changes in government spending (government
buying goods or paying for services) and taxes. Fiscal policy is
used to fight inflation or recession. Government Spending is known
as Discretionary Spending.
Two forms of fiscal policy:
1) Expansionary: the government is trying to expand the
economy. (shift graph to the right)
When: Recession
How: Increase government spending, reduce taxes....
Monetary and Fiscal Policy: Explain with the aid of diagrams, how an increase in Government spending...
Monetary and Fiscal
Policy:
Explain with the aid of diagrams, how
an increase in Government spending in a small open economy affects
the Aggregate Demand curve:
a. Assuming a flexible exchange
rate
b. Assuming a fixed exchange rate.
NO HANDWRITINGS PLEASE. I CAN'T READ MOST OF THE HANDWRITINGS,
UNFORTUNATELY. THANKS IN ADVANCE FOR TYPING ANSWERS
Government regularly uses fiscal and monetary policy in an attempt to influence the economy. Discuss a...
Government regularly uses fiscal and monetary policy in an
attempt to influence the economy.
Discuss a recent fiscal policy employed by the government.
Describe, using economic theory from the module and your own
research, how that policy is expected to affect the economy.
Discuss how crowding out may alter the actual effect of this
policy.
During a recession, what specific actions in fiscal policy will the government do to help the economy? What specific actions in monetary policy will the Fed do to help the economy?
During a recession, what specific actions in fiscal policy will the government do to help the economy? What specific actions in monetary policy will the Fed do to help the economy?
During an inflationary period and heated economy, what specific actions in fiscal policy and monetary policy will be expected?
When is it appropriate to use monetary and fiscal policy to stimulate or stabilize the economy?...
When is it appropriate to use monetary and fiscal policy to
stimulate or stabilize the economy? b. When is it inappropriate to
use monetary and fiscal policy to stimulate or stabilize the
economy? c. What specific fiscal policy tools would you use to
stimulate aggregate demand and how? d. What specific monetary
policy tools would you use to stimulate aggregate demand and how?
e. What is your conclusion, should policymakers use the monetary
and or fiscal policy to stimulate aggregate...
When is it appropriate to use monetary and fiscal policy to stimulate or stabilize the economy?...
When is it appropriate to use monetary and fiscal policy to
stimulate or stabilize the economy?
b. When is it inappropriate to use monetary and fiscal policy to
stimulate or stabilize the economy?
c. What specific fiscal policy tools would you use to stimulate
aggregate demand and how?
d. What specific monetary policy tools would you use to
stimulate aggregate demand and how?
e. What is your conclusion, should policymakers use the monetary
and or fiscal policy to stimulate aggregate...
When is it appropriate to use monetary and fiscal policy to stimulate or stabilize the economy?...
When is it appropriate to use monetary and fiscal policy to
stimulate or stabilize the economy? b. When is it inappropriate to
use monetary and fiscal policy to stimulate or stabilize the
economy? c. What specific fiscal policy tools would you use to
stimulate aggregate demand and how? d. What specific monetary
policy tools would you use to stimulate aggregate demand and how?
e. What is your conclusion, should policymakers use the monetary
and or fiscal policy to stimulate aggregate...
5. When is monetary policy preferred over fiscal policy? When is fiscal policy preferred over monetary...
5. When is monetary policy preferred over fiscal policy? When is
fiscal policy preferred over monetary policy?
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