Question

I know this is math, but, can anyone help me with economics please?

Answer 1

sure

Answer 2

The United States is suffering from a high rate of unemployment.

Identify two fiscal policy actions that Congress might initiate to solve the problem.
Using a correctly labeled AD/AS graph, show and explain how the policies you identified in (a) will affect each of the following in the short-run.
aggregate demand
output and employment
price level
Explain how the policies you identified in part (a) will impact real interest rates in the short-run.
If the interest rate effect you identified in part (b) continues in the long run, explain how economic growth will be impacted.

Answer 3

I have got the fiscal policies

Answer 4

ummmm so what exactly are u looking for :)

Answer 5

The graph :)

Answer 6

I'm pretty sure I answered this exact same question. The government is going to want to use expansionary policy, so you would increase government spending or decrease personal income taxes. This increases aggregate demand, or shifts it right. Draw this situation on an AD/AS graph and see what it does to price and output.

Answer 7

ok thank you :)

Answer 8

And what about this:
Explain how the policies you identified in part (a) will impact real interest rates in the short-run.
If the interest rate effect you identified in part (b) continues in the long run, explain how economic growth will be impacted.

Answer 9

Hold on. I completed this assignment but have to find it on my computer.

Answer 10

When the government uses expansionary fiscal policy, the demand for loanable funds increases. When demand shifts right, what happens to interest rates? Do they increase or decrease?

Answer 11

they increase

Answer 12

so is that the kind of graph I need?

Answer 13

@verlieren ?

Answer 14

Sorry, I was feeding my cat lol.
Yes, you'll need an AD/AS graph for the first part and then a loanable funds graph for the second part.

Answer 15

ok, and what is the better way to explain that in words?

Explain how the policies you identified in part (a) will impact real interest rates in the short-run.
If the interest rate effect you identified in part (b) continues in the long run, explain how economic growth will be impacted.

Answer 16

Does the price level decrease when employment increases?

Answer 17

When AD increases and therefore PL, that means RGDP is increasing. As RGDP increases, employment increases. i.e. as employment increases, PL increases.
Make sure not to copy my answer word for word as you'd get in trouble for plagiarism, but basically expansionary fiscal policy causes the demand for loanable funds to increase, increasing real interest rates. Higher interest rates stimulate financial investment, so the economy will grow...at least that's what I think. That was the one part I was unsure of. I'm still waiting for my assignment to get graded.

Answer 18

Ok. thanks a lot that was very helpful! :)