Use the AD/AS model to show an economy in recession. Explain how
fiscal policy can be used to move the economy back to the long run,
full employment level. Explain briefly. (1-2 pages)
Consider a disinflation policy. Using an AS/AD diagram, explain
the macroeconomic consequences of this shock, both immediately and
over time.
A) Assume that the expected inflation is formed by adaptive
expectations.
B) Assume that the expected inflation is formed by rational
expectations.
Show the impact of expansionary fiscal policy on a graph and in
words in the AD-AS model.
If the government continues to increase government spending even
after the natural rate of employment is reached, what happens in
the AD-AS model. Eventually, what is the price level and employment
level.
Describe using words and graphs the how the impact of fiscal
policy on output is different in a closed economy IS-LM model and
an open economy IS-LM model. In addition, explain carefully how the
open economy macro model depends on whether exchange rates are
fixed or flexible.
Describe using words and graphs the how the impact of fiscal
policy on output is different in a closed economy IS-LM model and
an open economy IS-LM model. In addition, explain carefully how the
open economy macro model depends on whether exchange rates are
fixed or flexible.
1) Using an AS-AD model of the economy, demonstrate on a graph
how different fiscal and monetary policies impact the economy.
2} How would you calculate the fiscal policy change needed to
achieve full employment?
Explain Monetary and Fiscal Policies.
a) How does contractionary monetary policy works? Explain by
graphs ( interest rate, exchange rate, consumption, import,
export)
b) How does expansionary fiscal policy works? Explain by graphs.
( interest rate, exchange rate, consumption, import, export)
Using an AD- AS model and the classical business cycles
framework, show graphically and explain the effects of an
unanticipated increase in the money supply (unanticipated
expansionary monetary policy).
Use the AD/AS graphical framework to show the effect of
expansionary fiscal policy on the level of output, prices and the
interest rate in the short run and the long run.
Using the AD-AS model, show and briefly explain the short and
long-run effects on the economy of a massive increase in
government-sponsored infrastructure spending.?