Question
Use the AD-AS and the Philips curve diagrams to show the short-run effects on prices (inflation) and output (unemployment)with following scenarios: a. Governmentexpendituresincrease. b. Businessesbecomelessoptimisticaboutthefuture.
Use the AD-AS and the Philips curve diagrams to show the short-run effects on prices (inflation) and output (unemployment)with following scenarios:
a. Governmentexpendituresincrease.
b. Businessesbecomelessoptimisticaboutthefuture.
c. Consumerconfidencerises.
d. Netexportsfallduetorecessionsinforeigncountries.
e. IftheCentralBankwantedtoreversetheeffectsofthoseshocksonoutput(senarios (a) to (d)),whatshoulditdo?For each senario, explain and show inthe AD-AS and the Philips curve diagrams.
f. Assumethatthe CentralBank now do nothing,In order to maintain output what would government do with fiscal policy in response tothosescenarios?Explain and show inthe AD-AS and the Philips curve diagrams.
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Macroeconomics Principles Applications And Tools
Authors: Arthur O Sullivan, Steven M. Sheffrin, Stephen J. Perez
7th Edition
ISBN: 978-0134089034, 9780134062754, 134089030, 134062752, 978-0132555234
