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What are automatic fiscal stabilizers

Assignment Help Macroeconomics
Reference no: EM132237908

Question 1. Aggregate Supply curve shows the relationship between the price level and the real GDP supplied in an economy.

Under what circumstances will the AS curve have a flat segment?

When an economy has a vertical AS curve?

The AS curve is upward sloping in the intermediate region between the horizontal and the vertical segments. What kind of macroeconomic conditions give rise to the upward sloping range?

Question 2. Write a one-page essay on the role of automatic stabilizers. In your essay include comments on the following points:

What are automatic fiscal stabilizers? How do these stabilizers stabilize real GDP in the face of AD and AS shocks?

What is the role of the simple multiplier [ 1/{1 - MPC(1 - t) - m}] in stabilization of the swings in real GDP?

How the slope of the AD curve affects the stability of real GDP in the presence of AS shocks?

How the automatic stabilizers depend on the sizes of MPC, t, and m.

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The paper basically discusses some of the components of macroeconomics some of which includes the Aggregate supply curve, the Keynesian approach and many others. It discusses the AS in the three stages, that is, the short run, the medium run and the long run. It also covers in broad the automatic stabilizers of the economy the AD and curve and the multipliers in the marginal propensity to consume, marginal propensity to import and marginal tax rates. The paper is prepared in Microsoft word in entirety.

Reference no: EM132237908

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