Question 12 Suppose that you are the Head of a Government in a country and your main aim, after a 4-years term in office, is that the potential growth of your country is higher. What kind of policy are you most likely to promote? A Structural reforms B) Expansionary monetary policy Increase public spending Expansionary fiscal policy

10. Following are data relating to a nation's operations last year. Capital consumption allowances Undistributed corporate profits Personal consumption expenditures Personal savings Corporate inventory valuation adjustment Federal govemment deficit Govemment purchases of goods and services State and local governments surplus Net exports of goods and services Gross private domestic investment $150 million 40 million 450 million 50 million -5 million -30 million 10 million 1 million -2 million 200 million a. Determine the nation's gross domestic product (GDP).

6.6) Which of the following statements about the open-economy IS curve is correct (a) It is steeper than the closed-economy IS curve because net export depends posi- tively on domestic income. (b) It would shift upward when the domestic government relaxes its import quotas. (c) All of the above. (d) None of the above.

1. Initial Effect 2. Saving Effect Suppose the United States decides to reduce export subsidies on U.S. agricultural products, but it does not decrease taxes or increase any other government spending. Initially, a reduction in export subsidies decreases net exports at any given real exchange rate, causing the demand for dollars in the foreign exchange market to decrease. This leads to a decrease in the real exchange rate, which, in turn, decreases imports to negate any decrease in exports, leaving the equilibrium quantity of net exports and the trade deficit unchanged at this point. However, the reduction in expenditure on export subsidies Real Interest Rate On the following graph, indicate the effect this has on the U.S. market for loanable funds. Real Interest Rate Supply X Demand Quantity of Loanable Funds STEP: 2 of 2 Net Capital Outflow NCO the fiscal deficit, thereby This causes the supply of dollars in the foreign exchange market to net exports to Given the change in the real…

(a) Suppose the price level in an economy rises while the money wage rate remains constant. What happens to the quantity of real GDP supplied. How will this affect the aggregate supply or aggregate demand curve? What if the potential GDP increases? Which aggregate curve is affected and how? (b) Real GDP Consumption Planned Investment Government Purchases Net Exports $1,000 $1,000 $100 $150 -$50   2,000   1,900   100   150   -50   3,000   2,800   100   150   -50   4,000   3,700   100   150   -50   From the table data provided, answer the following questions. The numbers in the table are in billions of dollars. Show all calculations. a. What is the equilibrium level of real GDP? b.    What is the Marginal Propensity to Consume? c. What is the multiplier value in this economy? d.    If potential GDP is $4,000 billion, is the economy at full employment? If not, what is the condition of the economy? e.    If the economy is not at full employment, by how much should government spending…

11. The U.S. economy slowed significantly in early 2008, and policy makers were extremely concerned about growth. To boost the economy, Congress passed several relief packages (the Economic Stimulus Act of Act of 2009) that combined would deliver about $700 2008 and the American Recovery and Reinvestment billion in government spending. Assume, for the sake of argument, that this spending was in the form of payments made directly to consumers. The objective was to boost the economy by increasing the disposable income of American consumers. a. Calculate the initial change in aggregate consumer spending as a consequence of this policy measure if MPC in the United States is 0.5. Then calculate the resulting change in real GDP arising from the $700 billion in payments. 76177 b. Illustrate the effect on real GDP with the use of a graph depicting the income-expenditure equilib- rium. Label the vertical axis “Planned aggregate spending, AE Planned" and the horizontal axis "Real GDP." Draw two…

2. The lowest level of the output gap during the Great Recession was -7.46% in July 2009. (a) Economists estimate the multiplier for the US economy to be 1.5. If this is true, what is ? (b) What would the percent change in government expenditure be to close this gap, assuming monetary policy is not being used?

ANSWER THE FOLLOWING QUESTIONS:  (Detailed responses (4-5 paragraphs for each question. No short answers please 1. Why did the unemployment rate increase in the year 2020? 2. How has the pandemic impacted inflation? 3. How did Covid-19 effect the stock market? 4. What was the potential impact of Covid-19 on GDP (gross domestic product) and trade?   A. Provide an introduction and the background of your study, and clearly state what your research question or objective is. What real world issue are you going to research; ie your research idea or objective: III. Briefly explain how the economic theory is related to your real world topic   Recent Trends of Real-World Evidence Report: Produce a report of facts/information to educate us about your chosen real world application. Find news items/articles that provide verifiable facts/data related to your topic of interest (views and opinions expressed via social media are not credible since they are not facts)). These should report recent…

44)Which of the following statements is most accurate regarding fiscal policy and monetary policy? Select one: a. Monetary policy can be changed more quickly than fiscal policy. Fiscal policy can be changed at any of the FOMC meetings and the smaller number of individuals involved makes it easier to change fiscal policy. b. Fiscal policy can be changed more quickly than monetary policy. Fiscal policy has much shorter delays due to the smaller number of legislators involved. c. Monetary policy can be changed more quickly than fiscal policy. Monetary policy can be changed at any of the FOMC meetings and the smaller number of individuals involved makes it easier to change monetary policy. d. Fiscal policy can be changed more quickly than monetary policy. Monetary policy has much longer delays due to the larger number of legislators involved.

3. deficits. (a) The federal government in the United States has been running large budget Use the loanable funds approach to show the effect of the U.S. budget deficit on the world real interest rate, holding everything else constant. (b) Now suppose that households believe that deficits will be financed by higher taxes in the near future, and households increase their saving in anticipa- tion of paying those higher taxes. Briefly explain how your analysis in part (a) will be affected.