Explain is curve and ad curve graph, Accounting Basics

Taxes are affected by the level of economic activity: When output increases, tax revenues typically increase, when output falls, tax revenues fall. Suppose a balanced- budget amendment is passed by Congress, which requires that the budget always be balanced. Further assume that the economy is initially operating at its natural level of output and that the budget is currently balanced

a.  Now suppose consumer confidence declines. What effect will this have on the IS Curve (graph and explain), on the AD curve (graph and explain), output, tax revenues and on the budget?

b.  Given that we now have a balanced- budget amendment, what will policymakers have to do in this situation?

c.  Based on your answers in "a" and "b", what effect does the existence of a balanced-budget amendment have on the output effects of any shock to aggregate demand?

d. Based on your analysis in question "c", what happens to the fluctuations in output caused by shocks to aggregate demand in the presence of a balanced-budget amendment?


Posted Date: 3/5/2013 6:08:37 AM | Location : United States

Related Discussions:- Explain is curve and ad curve graph, Assignment Help, Ask Question on Explain is curve and ad curve graph, Get Answer, Expert's Help, Explain is curve and ad curve graph Discussions

Write discussion on Explain is curve and ad curve graph
Your posts are moderated
Related Questions
Goods purchased from ranu p5000

Question: Artarmon Ltd uses a job-order costing system and a predetermined overhead rate based on direct labour cost. Estimated manufacturing overheads for the coming year were

UNITs UNIT COST UNIT SALE PRICE AUG 3 SALE 45 $ 83 8 PURCHASE 75 $ 52 21 SALE 70 $ 85 30 PURCHASE 10 $ 55 Decorative steel began August with 55 units of iron inventory th

Q. Explain about delivery expense? When shipping goods FOB destination freight prepaid the seller is accountable for and pays the freight bill. For the reason that the seller c

Define Accounting. Briefly explain the accounting concepts which guide the accountant at the recording stage.

ABC Insurance Company offers individual auto and home insurance servicing the East Coast. The company''s home office is located in Albany, New York. However, ABC Insurance Company

Oligopoly is a market where the supply is controlled by a little group of companies. In this condition, the actions of single company will have a material effect on the entire mark

Q. What do you mean by Aging? Aging -- a process where accounts receivable are sorted out by age (typically current, 30 to60 days old, 60 to 120 days old and so on.) Aging perm

a physical inventory on december 31 shows 2,000 units on hand. holliday sells the units for $12 each. the company has an effective tax rate of 20%. holliday uses the periodic inv