Answer to Question #115262 in Macroeconomics for Jahana

Question

Answer each of the following questions. Use a graphical explanation if it is stated and explain each step of your answer. Answers without an explanation will lose points.
a) (4 pts) Suppose the government executes an expansionary fiscal policy. By using the
AS-AD graph explain under which conditions an expansionary fiscal policy works well and under which conditions it does not work well. Explain each step in your answer.
b) (3 pts) Explain the crowding-out-of-investment of a decrease in the tax rate.
c) (4 pts) When there is a binding situation for the interest rate, graph the Aggregate
demand (AD) curve and explain the shape of the AD curve.
d) (4 pts) Suppose central bank applies inflation targeting. What would be the central
bank’s interest rate response if there is an increase in output (Y)? Graph the Aggregate demand (AD) curve and explain the shape of the AD curve.

Answer 1

Dear Jahana, your question requires a lot of work, which neither of our experts is ready to perform for free. We advise you to convert it to a fully qualified order and we will try to help you. Please click the link below to proceed: Submit order