Explain how an increase in government
Explain how an increase in government spending would affect the DD-AA schedule in the shortAnswer: An increase in government spending will increase aggregate demand, which will shi...
Explain how the AA schedule is derived.
Answer: For a fixed real money supply, an increase in output leads to an increase in the domestic interest rate. In the foreign exchange market, an increase in the domestic interes...
Imagine that the economy is at a point on the DD-AA schedule
Imagine that the economy is at a point on the DD-AA schedule that is above both AA and DD and where both the output and asset markets are out of equilibrium. Explain what will happ...
Discuss the main factors affecting the position
Discuss the main factors affecting the position of the DD schedule.Answer: The level of government demand, taxes, and investment; the domestic and foreign price levels; variations ...
the position of the AA schedule.
Discuss the main factors affecting the position of the AAAnswer: Changes in the domestic money supply; changes in the domestic price level; changes in the expected future exchange ...
Imagine that the economy is at a point on the DD-AA schedule
Use a figure to study the following question: Imagine that the economy is at a point on the DD-AA schedule that is above both AA and DD, where both the output and asset markets are...
Explain the following figure:
Answer: The figure depicts the effect of a permanent increase in the money supply starting from full employment equilibrium. After the initial increase in the money supply and the ...
show the phenomenon of overshooting.
Using the DD – AA framework, show the phenomenon of overshooting. Use a figure to explain when it is taking place.Answer: The figure below shows the phenomenon of overshooting. ...
a temporary fiscal expansion would increase output
Using a figure, show that under full employment, a temporary fiscal expansion would increase output (over-employment) but cannot increase output in the longAnswer: A temporarily fi...
Benefit(s) of the gold standard include
A.asymmetryB.making real values of national monies more stable andC.limiting moneyD.Both A andE.Both B andAnswer: E
the central bank gives up its ability to
By fixing the exchange rate, the central bank gives up its ability toA.adjustB.increase governmentC.influence the economy through fiscalD.depreciate the domesticE.influence the eco...
Fiscal Expansion under a fixed exchange
Fiscal Expansion under a fixed exchange rate has what effect(s) on the economy?A.The money supplyB.OutputC.The exchange rateD.The exchange rate decreases initially but then returns...
