Question

For questions 1-5, use AD-SRAS-LRAS model of the economy and IS-LM models; Assume SRAS curve is upward-sloping. Be sure your answers include an appropriate graph. Also, make sure to include a short qualitative (written) analysis of the policies/shocks, showing the chain effects of the variables discussed; 1) What happens in the short run to the interest rate, income, consumption, and investment under the following circumstances? - Consumers change their spending patterns sharply and significantly (confidence is falling) 2) Describe Long-run effects (transition from SR to LR) of the situation given above in question 1. 3) What happens in the short run to the interest rate, income, consumption, and investment under the following circumstances? - Henry Ford’s development of assembly line manufacturing. 4) Describe Long-run effects (transition from SR to LR) of the situation given above in question 3. 5) Monetary policy and fiscal policy often change at the same time - In the early 1980s, the U.S. government cut taxes and ran a budget deficit while the Fed pursued a tight monetary policy. What effect should this policy mix have in the Short run and in the Long Run? 6) AD-SRAS-LRAS model of the economy. Assume SRAS curve is upward-sloping Donald Trump has called for a national infrastructure bank that would leverage public and private funds to invest in projects across the country. Assume that he is elected president, and follows through on the proposal to boost public infrastructure spending. Use AD-AS model to discuss the macro impacts on the price level, real GDP and unemployment. Also use the IS–LM model to predict the short run effects of the above episode on income, the interest rate, consumption, and investment 7) Federal reserve is concerned about rising prices from the policy in question #6 above. What is the best policy option to fight inflation? Use AD-AS diagram to support your discussion Also, describe how would they implement the policy in practice

          For questions 1-5, use AD-SRAS-LRAS model of the economy and IS-LM models; Assume SRAS curve is upward-sloping. Be sure your answers include an appropriate graph. Also, make sure to include a short qualitative (written) analysis of the policies/shocks, showing the chain effects of the variables discussed;

1)  What happens in the short run to the interest rate, income, consumption, and investment under the following circumstances? - Consumers change their spending patterns sharply and significantly (confidence is falling)
2)  Describe Long-run effects (transition from SR to LR) of the situation given above in question 1.
3)  What happens in the short run to the interest rate, income, consumption, and investment under the following circumstances? - Henry Ford’s development of assembly line manufacturing.
4)  Describe Long-run effects (transition from SR to LR) of the situation given above in question 3.
5)  Monetary policy and fiscal policy often change at the same time - In the early 1980s, the U.S. government cut taxes and ran a budget deficit while the Fed pursued a tight monetary policy. What effect should this policy mix have in the Short run and in the Long Run?
6)  AD-SRAS-LRAS model of the economy. Assume SRAS curve is upward-sloping
Donald Trump has called for a national infrastructure bank that would leverage public and private funds to invest in projects across the country. Assume that he is elected president, and follows through on the proposal to boost public infrastructure spending. Use AD-AS model to discuss the macro impacts on the price level, real GDP and unemployment. Also use the IS–LM model to predict the short run effects of the above episode on income, the interest rate, consumption, and investment
7)  Federal reserve is concerned about rising prices from the policy in question #6 above. What is the best policy option to fight inflation? Use AD-AS diagram to support your discussion Also, describe how would they implement the policy in practice

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