how to print barcode in crystal report using vb.net Monetary policy is the primary type of policy used to affect the U.S. economy. in Java

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Monetary policy is the primary type of policy used to affect the U.S. economy.
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1. An increase in government spending always crowds out an equal amount of private-sector interest-sensitive spending.
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CHAPTER 8: Monetary and Fiscal Policy
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2. The net increase in equilibrium output is $10 when ke is 5, government spending increases $10, and higher interest rates crowd out $8 of investment spending. 3. An increase in aggregate demand has no effect upon real output when aggregate supply is vertical. 4. A $10 increase in the money supply increases equilbrium output $50 when ke is 5, there is no crowding out, and aggregate supply is positively sloped. 5. Monetary policy is more frequently used than scal policy since it more quickly impacts aggregate spending. Answers: 1. False; 2. True; 3. True; 4. False; 5. False
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Solved Problem 8.1 What happens to equilibrium output and the price level in Figure 8-2 when an increase in the money supply shifts aggregate demand from AD1 to AD2
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Figure 8-2
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80 PRINCIPLES OF ECONOMICS
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Solution: The rightward shift of aggregate demand, caused by an increase in the money supply, has no effect upon equilibrium output but increases the price level from p2 to p1. Aggregate demand shifts have no effect upon output whenever the aggregate supply curve is vertical; demand shifts in such an economic situation only affect the price level. Solved Problem 8.2 a. A stimulative monetary or scal action should increase aggregate demand. What factors may limit the actual increase in aggregate demand b. An increase in aggregate demand should raise equilibrium output. What is responsible for the size of the increase in equilibrium output Solution: a. Factors that constrain the aggregate demand shift when there is a scal or monetary stimulus are crowding out and the interest sensitivity of the demand for money and investment spending. An increase in government spending and/or a decrease in taxes raises output, usually resulting in an increase in the rate of interest. Higher interest rates can crowd out private-sector interest-sensitive investment spending. So, the actual increase in aggregate demand due to a scal stimulus depends upon the magnitude of the crowding-out effect. An increase in money supply raises private-sector spending by lowering the rate of interest. The actual decrease in the interest rate depends upon the interest sensitivity of the demand for money. The effect that a decrease in the interest rate has upon spending in turn depends upon the interest sensitivity of investment spending. Thus, a money supply increase can cause a large or small shift of the aggregate demand. b. An increase in aggregate demand should raise equilibrium output; the actual increase in output depends upon the slope of the aggregate supply curve. When aggregate supply is steeply sloped, demand increases have a smaller effect upon output than when aggregate supply is less steeply sloped.
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9
Economic Growth and Productivity
In This :
Concept of Economic Growth Growth through Population and Capital Accumulation Supply-Side Economics True or False Questions Solved Problems Concept of Economic Growth
Economic growth is concerned with the expansion of an economy s ability to produce (potential GDP) over time. Expansion of potential output occurs when there is an increase in natural resources, human resources, or capital, or when there is a technological advance. The two most common measures of economic growth are an increase in real GDP and an increase in output per capita. Of these two measures, an increase in output per capita is more meaningful since it indicates there are more goods and services available per person and hence a rise in the economy s standard of living. An increase in potential
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82 PRINCIPLES OF ECONOMICS
output can be conceptualized by an outward shift of an economy s production-possibility frontier. In our discussion of economic growth, we assume that increases in potential output are matched by equal increases in aggregate spending so that full-employment growth is assured.
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