Question.2989 - Discussion Question 1:Go to the BEA website www.bea.gov. On the left tab under Publications, go to the Interactive Data Tables. Select National Income and Product Accounts. From Table 1.1.6 and 1.1.7 examine all four components of GDP (C, I, G, and Xn). Which of these four components of AD declined the most during the 2007 and 2009 recession? Do you think an increase in government's spending (G) can boost the Aggregate Demand (AD) in a recession? Analyze why the economy may operate below full-employment GDP in the short run. How can the multiplier have a negative effect? What is the relationship between the multiplier and the marginal propensities? Explain.Discussion Question 2:Give an example of an event or incident that has taken place in the U.S. economy which has a major economic impact--be specific, e.g., 9/11 attack, natural disaster, rise or fall in oil prices due to OPEC policies, consumer optimism or pessimism about an expected economic expansion or downturn, increase in government spending on healthcare, tightening of the legal and institutional environment, and so forth. What effect would this event have on AD or AS, other things being constant? What would be the resulting effect on equilibrium price level? Explain. What will be the effect of the different tools of fiscal policy to stabilize the economy? Give an example of a built-in stabilizer and explain how it would work to reduce this rise or fall in the level of AD.
Answer Below:
Discussion xxx component xx aggregate xxxxxx AD xxxx fell xxx most xxxxxx the xxxxxxxxx was xxxxxxxxxx expenditure xxx four xxxxxxxxxx of xx and xx gross xxxxxxxx product xxx government xxxxxxxx consumer xxxxxxxx private xxxxxxxxxx and xxx exports xxxxxxx investment xxxx not xxxxx to xxxxxxx money xx stocks xxx bonds xxxxxxx it xxxxxx to xxxxxx like xxx construction xx homes xxx the xxxxxxxx of xxxxxxxxx by xxxxxxxxx Of xxx four xxxxxxxxxx private xxxxxxxxxx fell xxx farthest xxxxxxxxx to xxxxxx G xxxxxx be xxxx to xxxxx AD xx a xxxxxxxxx Simply xxxxxxx govt xxxxxxxx can xx controlled xx the xxxxx amounts xxx spent xx the xxxxx place xx short-run xxxxxxxxxxx occurs xx a xxxxx below xxxxxxxxxxxxxxx real xxx wages xxx prices xxxx fall xxx the xxxxxxxxx aggregate xxxxxx curve xxxx shift xx the xxxxx until xxxx employment xx restored xxx multiplier xxxxxx can xxxx in x positive xx a xxxxxxxx direction xx initial xxxxxxxx in xxxxxxxx will xxxxxx in x larger xxxxxxxx in xxxx GDP xxx an xxxxxxx decrease xx spending xxxx result xx a xxxxxx decrease xx real xxx The xxxxxxxxxx is xxxxxxxx related xx the xxxxxxxx propensities xx definition xxx multiplier xx related xx the xxxxxxxx propensity xx save xxxxxxx it xxxxxx MPS xxxx the xxxxxxxxxx and xxx MPS xxx inversely xxxxxxx The xxxxxxxxxx is xxxx related xx the xxxxxxxx propensity xx consume xxxxxxx it xxxx equals xxx The xxxxxxx reduced xxxxxxxx and xxxxxxxx confidence xxxxxxx aggregate xxxxxx to xxxxxxxx The xxxxxx of xxx attacks xxxxx was x supply xxxxx which xxxxxxxx in xxx short xxx supply xxxxx shift xx the xxxx which xxxxxxx a xxxxxxxxx in xxx production xxxxx and xx increase xx the xxxxx level xxx decrease xx aggregate xxxxxx and xxxxxx causes xxxxx equilibrium xxxxxx and xxxxxx and x recession xxxxxx Lower xxxxxxxxx demand xxxxxxx equilibrium xxxx gross xxxxxxxx product xxx overall xxxxxx The xxxxxx response xx the xxxxxxx was xxxxxxxxxx slower xxxx compared xx the xxxxxx of xxxxxxxx policy xxx automatic xxxxxxxxxxx and xxxxxxxxxx emergency xxxxxxxxxxxx were xxx into xxxxxx quickly xxx stimulus xxxx was xxx signed xxx by xxx time xx was xxxxxx the xxxxxxxxx had xxxxxxx ended x built-in xxxxxxxxxx works xx slow xxx rise xx fall xx aggregate xxxxxx AD xx giving xxxx money xx consumers xx by xxxxxx money xxxx from xxxx As xxx people xxxx more xx less xxxxxxx to xxx AD xx affected xx the xxxxxxxxxx gives xxxxx to xxxxxx in x recession xxx people xxxx more xxxxx and xxx decline xx AD xx likely xx slow xx stop xx the xxxxxxxxxx takes xxxx people xx an xxxxxxxxxx economy xxxxxxxxx n x Retrieved xxxxxx from xxxx www xxxxxx ucl xx uk xxxxx Review xxxxxxxxx and xxxxxxx for xxxxxxx pdfEnote x d xxxxxxxxx August xxxx http xxx enotes xxx homework-help xxxxxxxx example-built-stabilizer-explain-how- xxxxxxx G xxxxxxxxx Report xxx Congress xxxxxxxxx August xxxx http xxx fas xxx irp xxx RL xxx ney xx spend xxx the xxxx in xx is xxxxxx to xxxx or xxxx Bibliography xxxxx n x Retrieved xxxxxx from xxxx www xxxxxx com xxxxxxxxxxxxx give-an- xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Makinen x September xxxxxx for xxxxxxxx Retrieved xxxxxx from xxxx www xxx org xxx crs xx pdfMore Articles From Economics
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