Cashback Offer (15th - 25th November 2020). Get Flat 10% Cashback credited in your account on a minimum transaction of $80. Post Your Question

Question DetailsNormal
$ 10.00

AB 204 Unit 8 Assignment

Question posted by
Online Tutor Profile
request

1. Long-run Macroeconomic Equilibrium and Stock Market Boom
 

Let us assume the economy reaches its long-run macroeconomic equilibrium in 2020. When the economy is in the long run macroeconomic equilibrium, the stock market will also reach its boom. This will in turn lead to increases in stock prices more than expected, and the stock prices will stay high for some period.

2) Studies indicate that net exports and net capital outflows tend to be equal.

a) Why do net exports and net capital outflows tend to be equal? How does an increase in the price level change interest rates?

b) How does this change in interest rates lead to changes in investment and net exports?

3) Assume there is a decrease in the demand for goods and services, which leads to a decrease in the real GDP and eventually the economy into recession.

a) When the economy enters recession due to a decline in demand, what will happen to the price level?

b) Assume there is no government intervention. What will ensure that the economy still eventually gets back to the natural rate of output (real GDP)?

4) A number macroeconomic variables decline during recessions. One of these variables is the GDP.

a) What other variables, besides real GDP, tend to decline during recessions? Given the definition of real GDP and its components, explain the declines in these economic variables which are to be expected.

    b) Empirical studies indicate that the long-run trend in real GDP of the USA has an upward trend. How is this possible given business cycles and macroeconomic fluctuations? What factors explain the upward trend in spite of the cycles?

5) Assume there are short-run and long-run Macroeconomic Equilibriums in the economy.

Refer to the AS and AD curves above to answer the following questions.

What is the initial point of the long-run macroeconomic equilibrium? What are the equilibrium values? What does the appearance of the long-run aggregate-supply (LRAS) curve indicate? How does it differ from AS?

What are the factors that can shift short-run aggregate supply curve from AS1 to AS2? What does Point A represent in the graph? What does point B represent? Is it the short-run or long-run macroeconomic equilibrium? Explain.

Assume aggregate demand (AD) is held constant, in the long-run, starting from point B, what will the economy likely experience? Will it reach the long equilibrium?

Available Answer
$ 10.00

[Solved] AB 204 Unit 8 Assignment

  • This solution is not purchased yet.
  • Submitted On 01 Dec, 2019 12:16:33
Answer posted by
Online Tutor Profile
solution
Let us assume the economy reaches its long-run macroeconomic equilibrium in 2020. When the economy is in the long run macroeconomic equilibrium, the stock market will also reach its boom. This will in turn lead to increase...
Buy now to view the complete solution
Other Similar Questions
User Profile
austi...

AB 204 Unit 1 - Unit 9 All Assignments

AB 204 Unit 1 Assignment Ten Principles of Economics AB 204 Unit 2 Assignment Economic Models and Comparative Advantage AB 204 Unit 3 Assignment Supply and Demand Model and PPF AB 204 Unit 4 Assignment AB 204 Unit...
User Profile
austi...

AB 204 Unit 9 Assignment Monetary and Fiscal Policy, Macroeconomic Fluctuations and Macroeconomic

When a household experiences a decrease in wealth, there will be some effects on the economy. First, due to the decrease in consumption, the long-run aggregate demand curve will shift leftward, from D1 to D2. This will cause ...
User Profile
austi...

AB 204 Unit 8 Assignment

Let us assume the economy reaches its long-run macroeconomic equilibrium in 2020. When the economy is in the long run macroeconomic equilibrium, the stock market will also reach its boom. This will in turn lead to increases i...
User Profile
austi...

AB 204 Unit 7 Assignment Money, Banks and the Federal Reserve System

This section deals with increase money supply given two scenarios (see “a” and “b” below). In Westlandia, the public holds 50% of money one (M1) in the form of currency, and the required reserve ratio is 20%. E...
User Profile
austi...

AB 204 Unit 6 Assignment

Economic growth is essential to increasing the standards of living for the members of a society. This concept can be measured through the GDP of a country which is based on productivity or, “the quantity of goods and servic...

The benefits of buying study notes from CourseMerit

homeworkhelptime
Assurance Of Timely Delivery
We value your patience, and to ensure you always receive your homework help within the promised time, our dedicated team of tutors begins their work as soon as the request arrives.
tutoring
Best Price In The Market
All the services that are available on our page cost only a nominal amount of money. In fact, the prices are lower than the industry standards. You can always expect value for money from us.
tutorsupport
Uninterrupted 24/7 Support
Our customer support wing remains online 24x7 to provide you seamless assistance. Also, when you post a query or a request here, you can expect an immediate response from our side.
closebutton

$ 629.35