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Tutorial 8 Qns 1

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WeeYang Ng

on 17 March 2013

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Transcript of Tutorial 8 Qns 1

The End a. A tax cut holding government purchases constant with the economy operating at near full capacity c. An increase in the price of oil caused by a war in the Middle East, assuming that the Fed attempts to keep interest rates constant by accommodating inflation d. An increase in taxes and a cut in government spending supported by a cooperative Fed acting to keep out put from falling HE1002 Macroeconomic Principles Nguyen Hoang Linh
Nguyen Thi Loan
Nguyen Thi Ngoc Quy
Heng Kuan Yi Zhong Yangzhi
Ng Wee Yang
Joel Wong Tutorial 8 Presentation Question 1(Q.3,Page 297) By using aggregate supply and demand curves to illustrate your points, discuss the impacts of the following events on the price level and on equilibrium GDP(Y) in the short run b. An increase in the money supply during a period of high unemployment and excess industrial capacity Part A Part B Part C Part D i)AD will fall due to increase in T and decrease in G
(AD1 to AD2)
ii)AD will rise as Fed will use i/r to increase I thus increasing output
(AD2 to AD1)
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