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 xxxx Private xxxxxxxxxx does xxx refer xx putting xxxxx in xxxxxx and xxxxx nbsp xxxxxxx it xxxxxx to xxxxxx like xxx construction xx homes xxx the xxxxxxxx of xxxxxxxxx by xxxxxxxxx nbsp xx the xxxx components xxxxxxx investment xxxx the xxxxxxxx According xx Keynes x should xx used xx boost xx in x recession xxxxxx because xxxx spending xxx be xxxxxxxxxx at xxx right xxxxxxx and xxxxx at xxx right xxxxx If xxxxxxxxx equilibrium xxxxxx at x point xxxxx full-employment xxxx GDP xxxxx and xxxxxx will xxxx and xxx short-run xxxxxxxxx supply xxxxx will xxxxx to xxx right xxxxx full xxxxxxxxxx is xxxxxxxx The xxxxxxxxxx effect xxx work xx a xxxxxxxx or x negative xxxxxxxxx An xxxxxxx increase xx spending xxxx result xx a xxxxxx increase xx real xxx and xx initial xxxxxxxx in xxxxxxxx will xxxxxx in x larger xxxxxxxx in xxxx GDP xxx multiplier xx directly xxxxxxx to xxx marginal xxxxxxxxxxxx By xxxxxxxxxx the xxxxxxxxxx is xxxxxxx to xxx marginal xxxxxxxxxx to xxxx because xx equals xxx Thus xxx multiplier xxx the xxx are xxxxxxxxx related xxx multiplier xx also xxxxxxx to xxx marginal xxxxxxxxxx to xxxxxxx because xx also xxxxxx ndash 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 nbsp xx the xxxxxx have xxxx or xxxx ability xx buy xx is xxxxxxxx nbsp 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 xxxx If xxx government xxxxx from xxxxxx in xx overheated xxxxxxx Economics x d xxxxxxxxx August xxxx http xxx cserge xxx ac xx Extra xxxxxx Questions xxx Answers xxx Chapter xxxxxxxx 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 pdf xxx to xxxxx and xxx rise xx AD xx likely xx slow xx stop xxxxxxxxxxxx Enote 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 xxxMore Articles From Economics
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