Firms become more optimistic about their future profits

Assignment Help Business Economics

Reference no: EM13981103

Suppose that firms become more optimistic about their future profits. Using the AD-AS model (with a Keynesian perspective), answer the following questions.

a. In the absence of any policy intervention, what will happen to prices and output over the short- and long-run? What will happen to real interest rates in the long run?

b. Taking an activist (Keynesian) approach, show how one can use fiscal policy to return the economy to full employment. Would taxes be increased or decreased? How about government spending? If these policies were implemented, what would happen to interest rates?

c. Repeat part (b) for monetary policy. Would the Federal Reserve make an open market purchase or sale? If these policies were implemented, what would happen to interest rates?

Reference no: EM13981103

Questions Cloud

Prepare an informal proposal : For this assignment, you will incorporate the information you have learned on memo writing and prepare an informal proposal. After identifying your primary and secondary audience, prepare a short planning proposal (one single-spaced page in memo f..

Compute the mean and median : Compute the variance, standard deviation, range, coefficient of variation, and Z scores. Are there any outliers? Explain.

Fair price based on formula accounting for costs of material : According to the Wall Street Journal, the US Department of Commerce has "decided that display prices by Japanese companies in their home market may be artificially low. Rather than comparing US prices with Japanese prices, Commerce is now coming up w..

Consider a temporary oil price increase : Consider a temporary oil price increase. Using the AD-AS model (with a Keynesian perspective), answer the following questions. In the absence of any policy intervention, what will happen to prices and output over the short- and long-run? Could the Fe..

Firms become more optimistic about their future profits : Suppose that firms become more optimistic about their future profits. Using the AD-AS model (with a Keynesian perspective), In the absence of any policy intervention, what will happen to prices and output over the short- and long-run? What will happ..

Point of view or some aspect of the music : Remember: This project is about music. Do not spend much time in plot description. You do not need to write about all of the music in a film. You can choose a point of view or some aspect of the music in the movie and focus on that.

Performance and risk exposures in the market : Research Bank of America's performance and risk exposures in the market since 2008. What is its biggest strength? What is its biggest challenge? How does the B of A manage its risks and survive its crisis period?

What is an idiom : What is an idiom? Give an example. You have to look up the word "idiom" and see the various ways it is defined and then pick a definition that you see as particularly useful for linguistic study and give an illustration of that usage.

Highly impacts the type of sampling : There's a number of sampling types. Probability sampling contains sampling randomly and non-probability sampling doesn't. The research that was conducted highly impacts the type of sampling one uses

User Account

All Pages