Question.3073 - 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. 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:
Question xx to xxx BEA xxxxxxx www xxx gov xx the xxxx tab xxxxx Publications xx to xxx Interactive xxxx Tables xxxxxx National xxxxxx and xxxxxxx Accounts xxxx Table xxx examine xxx four xxxxxxxxxx of xxx C x G xxx Xn xxxxx of xxxxx four xxxxxxxxxx of xx declined xxx most xxxxxx the xxx recession xx you xxxxx an xxxxxxxx in xxxxxxxxxx amp x spending x can xxxxx the xxxxxxxxx Demand xx in x recession xxxxxxx why xxx economy xxx operate xxxxx full-employment xxx in xxx short xxx How xxx the xxxxxxxxxx have x negative xxxxxx What xx the xxxxxxxxxxxx between xxx multiplier xxx the xxxxxxxx propensities xxxxxxx Answer xx per xx understanding xxx government xxxxxxxx can xxxxx the xx curve xx the xxxxxxxxx until xxxxxx There xx space xxxxxxxx in xxx economy xxx The xxxxxxx sector xx buying xxxxx at xxx interest xxxxx If xxxxx conditions xxx rsquo x apply xxxx the xxxxx shall xxxxxxxx be xxxxxx out xx crowding xxx effect xxxx employment xxxxx that xxx economy xx utilizing xxx its xxxxxxxxx to xxx full xxxxxxxxxxx in xxx short xxx with xxxxxxxxxx resource xxxxxx resource xxxxxxx are xxx in xxxxxxxxxxx which xxxxx that xxx real xxxxxxxxxx can xx either xxxxxxx or xxxx than xxx level xxxx would xxxxx employ xxx resources xxx multiplier xx simply xxx ratio xx the xxxxxx in xxxx GDP xx the xxxxxxx change xx spending xxx multiplier xxxxxx can xx positive xx negative 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 MP x 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 Question xxxx an xxxxxxx of xx event xx incident xxxx has xxxxx place xx the x S xxxxxxx which xxx a xxxxx economic xxxxxxxxxx specific x g xxxxxx natural xxxxxxxx rise xx fall xx oil xxxxxx due xx OPEC xxxxxxxx consumer xxxxxxxx or xxxxxxxxx about xx expected xxxxxxxx expansion xx downturn xxxxxxxx in xxxxxxxxxx spending xx healthcare xxxxxxxxxx of xxx legal xxx institutional xxxxxxxxxxx and xx forth xxxx effect xxxxx this xxxxx have xx AD xx AS xxxxx things xxxxx constant xxxx would xx the xxxxxxxxx effect xx equilibrium xxxxx level xxxxxxx What xxxx be xxx effect xx the xxxxxxxxx tools xx fiscal xxxxxx to xxxxxxxxx the xxxxxxx Give xx example xx a xxxxxxxx stabilizer xxx explain xxx it xxxxx work xx reduce xxxx rise xx fall xx the xxxxx of xx Answer xxx attack xx the xx would xxxxx the xxxxxx curve xxx the xxxxxx curve xxxxxxxxx The xxxxxx had x major xxxxxx on xxx economy xx the xxxxxxx The xx curve xx well xx the xx curve xxxxx shift xxxx for xxx time xxxxxx The xxxxxxxxx equilibrium xxxxx level xxxxx also xxxx downwards xx a xxxxxx of xxx above xxx different xxxxx of xxxxxx policy xxxx increasing xxxxxxxxxx spending xxx cutting xxx rates xxxxx boost xxx economy xxxx shall xxxxx the xxxxxx curve xx the xxxxx Automatic xxxxxxxxxxx are xxxxxxxx responses xx changes xx GDP xxxxx increase xxxxxx deficits xxxxxx a xxxxxxxxx and xxxxxxxx budget xxxxxxxxx during xxxxxxx of xxxxxxxxx Lets xxxx an xxxxxxx of xxx revenues xx GDP xxxxx net xxxxx also xxxx Because xxx net xxxxx exceed xxxxxxxxxx expenditure x budget xxxxxxx is xxxxxxx This xxxxx have x contractionary xxxxxx on xxx economy xxxxxxxxx inflationary xxxxxxxxx On xxx other xxxx during xxxxxxxxx nettaxes xxxx decrease xxx resulting xxxxxx deficit xxxx help xxxxxx GDP xxxx to xxxxxxxxxxxxx levelsMore Articles From Economics
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