The short-run macroeconomic equilibrium, Macroeconomics

Assignment Help:

The figure below defines an economy's aggregate demand curve and its short-runand long-run aggregate supply curves (labelled AD, SRAS, and LRAS, respectively). practically,the economy is in macroeconomic equilibrium.

Figure: A hypothetical AD-AS model

525_11.png

The government announces that households will pay more higher taxes.

a.  Show graphically the effect on the short-run macroeconomic equilibrium. Write shortly all the essential steps.

b.  What type of output gap do we have in this condition?

c.  Show graphically the long-run self-correcting mechanism in the economy. Write shortly all the necessary steps.

d.  Suppose that the government uses the fiscal policy to close the output gap. What type of fiscal policy the government should use to close the output gap. Show graphically the effects of the prescribed fiscal policy. Write briefly all the essential steps.

 

 


Related Discussions:- The short-run macroeconomic equilibrium

Assignment, C=100+0.75Yd How do i calculate marginal propensity to consume...

C=100+0.75Yd How do i calculate marginal propensity to consume?

Example of macroeconomics, Could you please tell me an example and describe...

Could you please tell me an example and describe example of macroeconomics?

Incentives, Incentives Incentives designed to increase effort, reward e...

Incentives Incentives designed to increase effort, reward enterprise and encourage saving and investment include: an emphasis on the effect of a reduction in the margi

Econ, Christina Romer and Jared Bernstein in "The Job Impact of the America...

Christina Romer and Jared Bernstein in "The Job Impact of the American Recovery and Reinvestment Plan" calibrated the impact of the proposed expansionary fiscal policy (we know it

Society seeks for monopolists, Society seeks for monopolists to operate at ...

Society seeks for monopolists to operate at the point where _______ = MC which is the lowest point on the ATC curve (the most efficient). A) D B) ATC C) MR D) AVC

Inflation in germany, Once we have monthly data on a price index we can eva...

Once we have monthly data on a price index we can evaluate the inflation. In most nations, the percentage change in price index during one month is small. Hence it is more common t

Unemployment, Who is considered unemployed?

Who is considered unemployed?

Give an example also diminishing returns to an input, Explain the productio...

Explain the production function and discuss why it is important? Explain diminishing returns to an input and give an example? Discuss why a firm's cost curve might be different in

Discuss the determinants of transaction demand, Question 1 How was the Cla...

Question 1 How was the Classical Theory of interest role criticized by Keynes? Question 2 Discuss the barter system that was used in early times in lieu of money Question

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd