When the Aggregate supply curve is in the intermediate phase, if Government deficit spending increases and...

When the Aggregate supply curve is in the intermediate phase, if Government deficit spending increases and increases Aggregate Demand then:

Real GDP increases, Jobs are created and the CPI increases

Real GDP increases, the CPI increases but the unemployment rate increases

the unemployment rate falls, the CPI rises and Real GDP stays the same

the CPI increases, Real GDP falls and the unemployment rate falls

Solutions

Expert Solution

Rahul Sunny answered 1 year ago

Next > < Previous

Related Solutions

What happens to the aggregate demand curve when government spending is increased by $100 million, and...

What happens to the aggregate demand curve when government spending is increased by $100 million, and the government raises income taxes $100 million in the same month to pay for the transfer payments? Take your time; draw it out; use the book. Why might they spend less one month than another month? LIST THE THREE FISCAL POLICY ACTIONS THE FEDERAL GOVERNMENT CAN DO TO REDUCE AGGREGATE DEMAND TO LESSEN INFLATION. LIST THE THREE FISCAL POLICY ACTIONS THE FEDERAL GOVERNMENT CAN...

Assuming an upward-sloping supply curve, when aggregate demand increases then: ____, and . What happens to...

Assuming an upward-sloping supply curve, when aggregate demand increases then: ____________________, and ________________. What happens to macro equilibrium?

Assuming an upward-sloping supply curve, when aggregate demand increases then: ____, and . What happens to...

Assuming an upward-sloping supply curve, when aggregate demand increases then: ____________________, and ________________. What happens to macro equilibrium?

Suppose the federal government unexpectedly decreases its spending. With the aid of an aggregate demand-aggregate supply...

Suppose the federal government unexpectedly decreases its spending. With the aid of an aggregate demand-aggregate supply diagram, explain how this contractionary fiscal policy affects the price level, P, and total output, Y, in the short-run. How does the economy adjust to this policy in the long-run? What is the effect of this policy on P and Y in the long-run? [Note: Assume that the economy is in a long-run equilibrium prior to the increase in government spending. Also assume that...

Assume an economy operates the intermediate range of its aggregate supply curve Describe the factors that...

Assume an economy operates the intermediate range of its aggregate supply curve Describe the factors that impact on the aggregate demand and factors that impact on aggregate supply State the direction of effect on aggregate demand or aggregate supply for each of the following changes in the conditions: The price of crude oil drops significantly due to the application of a new extraction technology known as "fracking". A new strategic pact with a group of neighbouring nations is struck which...

In what portion of the aggregate supply curve is the current U.S economy operating? Keynesian, intermediate...

In what portion of the aggregate supply curve is the current U.S economy operating? Keynesian, intermediate or neoclassical. please explain why?

Describe and explain the shape of the short run aggregate supply curve along the Keynesian, intermediate...

Describe and explain the shape of the short run aggregate supply curve along the Keynesian, intermediate and neoclassical zones. Identify the zone(s) where unemployment should be the focus and where inflation should be the focus.

Suppose government spending increases. Would the effect on aggregate demand be larger if the Federal Reserve...

Suppose government spending increases. Would the effect on aggregate demand be larger if the Federal Reserve held the money supply constant in response or if the Fed were committed to maintaining a fixed interest rate? Explain.

Suppose the Phillips curve is correct. If the government increases taxes, then aggregate demand decreases and...

Suppose the Phillips curve is correct. If the government increases taxes, then aggregate demand decreases and unemployment falls in the short run Select one: True False According to the long-run Phillips curve, in the long run, unemployment depends upon factors such as fiscal and monetary policies that are designed to reduce cyclical unemployment. Select one: True False Proponents of rational expectations argued that if people expected a decrease in the money supply growth rate and inflation, then the decrease in...

In the short run, an increase in government purchases, a. shifts the aggregate supply curve to...

In the short run, an increase in government purchases, a. shifts the aggregate supply curve to the right b. increases real GDP c. shifts the aggregate demand curve to the left d. decreases the price level

Subjects