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 s xxxxxxxx G xxx boost xxx Aggregate xxxxxx AD xx a xxxxxxxxx Analyze xxx the xxxxxxx may xxxxxxx below xxxxxxxxxxxxxxx GDP xx the xxxxx run xxx can xxx multiplier xxxx a xxxxxxxx effect xxxx is xxx relationship xxxxxxx the xxxxxxxxxx and xxx marginal xxxxxxxxxxxx Explain xxxxxx As xxx my xxxxxxxxxxxxx the xxxxxxxxxx spending xxx boost xxx AD xxxxx in xxx recession xxxxx unless xxxxx is xxxxx capacity xx the xxxxxxx and xxx private xxxxxx is xxxxxx bonds xx low xxxxxxxx rates xx these xxxxxxxxxx don 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 MPC xxxxxxxx Give xx example xx an xxxxx or xxxxxxxx that xxx taken xxxxx in xxx U x economy xxxxx has x major xxxxxxxx impact--be xxxxxxxx e x attack xxxxxxx disaster xxxx or xxxx in xxx prices xxx to xxxx policies xxxxxxxx optimism xx pessimism xxxxx an xxxxxxxx economic xxxxxxxxx or xxxxxxxx increase xx government xxxxxxxx on xxxxxxxxxx tightening xx the xxxxx and xxxxxxxxxxxxx environment xxx so xxxxx What xxxxxx would xxxx event xxxx on xx or xx other xxxxxx being xxxxxxxx What xxxxx be xxx resulting xxxxxx on xxxxxxxxxxx price xxxxx Explain xxxx will xx the xxxxxx of xxx different xxxxx of xxxxxx policy xx stabilize xxx economy xxxx an xxxxxxx of x built-in xxxxxxxxxx and xxxxxxx how xx would xxxx to xxxxxx this xxxx or xxxx in xxx level xx AD xxxxxx The xxxxxx on xxx US xxxxx shift xxx demand xxxxx and xxx supply xxxxx downwards xxx attack xxx a xxxxx impact xx the xxxxxxx of xxx country xxx AD xxxxx as xxxx as xxx AS xxxxx shall xxxxx left xxx the xxxx period xxx resulting xxxxxxxxxxx price xxxxx shall xxxx move xxxxxxxxx as x result xx the xxxxx The xxxxxxxxx tools xx fiscal xxxxxx like xxxxxxxxxx government xxxxxxxx and xxxxxxx tax xxxxx shall xxxxx the xxxxxxx This xxxxx shift xxx demand xxxxx to xxx right xxxxxxxxx stabilizers xxx built-in xxxxxxxxx to xxxxxxx in xxx which xxxxxxxx budget xxxxxxxx during x recession xxx increase xxxxxx surpluses xxxxxx periods xx inflation xxxx take xx example xx tax xxxxxxxx As xxx rises xxx taxes xxxx rise xxxxxxx the xxx taxes xxxxxx government xxxxxxxxxxx a xxxxxx surplus xx created xxxx shall xxxx a xxxxxxxxxxxxxx effect xx the xxxxxxx relieving xxxxxxxxxxxx pressures xx the xxxxx hand xxxxxx recession xxxxxxxx will xxxxxxxx The xxxxxxxxx budget xxxxxxx will xxxx expand xxx back xx pre-recession xxxxxxMore Articles From Economics
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