User Account

All Pages

Explain how the economy could reach a full employment level

Assignment Help Macroeconomics
Reference no: EM133522454

Let's assume the economy was operating at full employment before the pandemic hit. When the pandemic started, many sectors of the economy were shut down, causing a decrease in labor demand and resulting in unemployment. Additionally, consumer income decreased, causing people to save more and reducing their demand for goods and services. This question will guide you through a step-by-step model to demonstrate the effects of the pandemic's onset.

As for the following questions, let's assume that the economy is at full employment, and we want to showcase general equilibrium. This means that the intersection of the IS and LM curves will be at the full employment level of output and on the FE line.

Question 1). Use the model to demonstrate the effects of a decrease in consumer spending and the associated IS curve on the equilibrium in the goods market? Please provide a diagram of the Saving Investment equilibrium in the goods market and illustrate the impact of an increase in saving on the IS curve. Please only show the shift in the IS curve and do not concern yourself with the general equilibrium or the other markets.

Question  2). To continue analyzing the market equilibrium graph for savings and investment, repeat step 1, but this time, consider the effects of a decrease in business sentiment that would lead to a decline in business investment. Show the impact of this change on the market equilibrium and the IS curve, similar to the previous analysis.

Question  3.)Please display the changes in the IS and AD curves and the resulting new level of output in the short run. Please keep the FE curve constant to show our target level of full employment output or potential output, even though there may be a temporary reduction in labor demand.

Question  4). Last, Illustrate and explain how the economy could reach a full employment level of output if the markets respond quickly. Also, what changes occur in the price level, interest rates, and output as the economy returns to its full employment level?

 

Reference no: EM133522454

Questions Cloud

How cultural fluency benefits your self-awareness : Describe how you would demonstrate cultural fluency in the scenario and Describe how cultural fluency benefits your self-awareness
Filled with the patient medication : You are working with another nurse, who hands you a syringe she has already filled with the patient's medication, so you can practice your injection skills.
What are the shortcomings of using gdp as a measure : What are the shortcomings of using GDP as a measure of economic welfare? What would you like to add to (or subtract from) GDP to make it a better reflection
What therapeutic strategies : What therapeutic strategies do you believe are most important when caring for a child and family with head trauma?
Explain how the economy could reach a full employment level : Use the model to demonstrate the effects of a decrease in consumer spending and the associated IS curve on the equilibrium in the goods market?
Describe core principles of social justice in the scenario : Explain the difference between justice, fairness, and equality in the scenario and how bias can influence your perception of social justice in the scenario
Discuss how you would differentiate their target market : Discuss how you would differentiate their target market from their market segment. Identify at least two product positioning strategies applied.
Patient nursing diagnosis is impaired verbal communication : Patient other nursing diagnosis is impaired verbal communication R/T expressive language disorder AEB Slurred Speech not understanding what patient says.
How would you weigh the benefits and drawbacks of attracting : How would you weigh the benefits and drawbacks of attracting the tech startup, and what factors would you consider in making your decision to foster economic

Reviews

Write a Review

Macroeconomics Questions & Answers

  Inflation by definition real wages have factored inflation

It cannot be as the inflation by definition real wages have factored inflation in.

  Describe and explain how electronic commerce is impacting

describe and explain how electronic commerce is impacting trade both domestic and international. how does electronic

  Differences between rfid and nfc communication technologies

Use the Internet to research the differences between RFID and NFC communication technologies. Then write a paper in current APA format that compares three similarities and three differences

  Which of the happing tends to occur during recessions

Which of the followings tends to occur during recessions Cyclical unemployment tends to fall The stock markets tends to surge (experience a rapid rise in prices) Interest rates tend to fall Gross Domestic Product rises Consumer ..

  What is mike expected utility from the trip

(a) What is Mike's expected utility from the trip? (b) Suppose Mike can buy an insurance policy that will cover the entire $1600 loss.

  Educational pursuits or on the job

Describe any action research that you have employed in your educational pursuits or on the job. Discuss how you might use action research to conduct your research in terms of your currently selected topic? Provide several examples.

  Determination of output and substitution effects

Use the firm's isoquant-isocost diagram and the firm's marginal cost curve to explain and illustrate the output and substitution effects of a decrease in the price of labor.

  How the disruption occurred

Retail Bank has been disrupted by technological factors/Fintechs. How the disruption occurred, Example firms that have led the disruption

  Showing the relationship between fixed

(a) Describe 3 factors which could increase the supply of bicycles. (b) Describe, using examples, what is meant by fixed costs and variable costs. (c) Draw a diagram showing the relationship between fixed, variable, and total costs.

  Describe the income inequality hypothesis

Use the production function equation to describe the 'income inequality hypothesis', i.e., that labour income is being redistributed to capital. What might that particular model imply about what is happening and why

  Standard deviation of the fraction

If an insurance company has 10000 policies and each has 0.1 probability of making a claim what is the standard deviation of the fraction whice result in a claim

  Are charging a relatively high tuition and using standard

Harvard, Yale and Princeton all charge relatively high tuition. Still each uses ACT and SAT score as admission criteria. Are charging a relatively high tuition and using standardized test scores inconsistent? Explain your answer

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd