QUESTION 21 Suppose ‘-0 60.4-0.20, ,0.20 a-0.10, and “0 20. For any given Rr equ

Question

QUESTION 21 Suppose ‘-0 60.4-0.20, ,0.20 a-0.10, and “0 20. For any given Rr equals _ and the economy _ _ a.-0.10; has experienced a negative aggregate demand shock b. 1.00; is in its long-run equilibrium C 0; is in its long-run equilibrium o d.0.90; has experienced a positive aggregate demand shock e. 0.30; has experienced a positive aggregate demand shock QUESTION 22 Suppose a. =0.75, ai = 0.1 5ag = 0.20,-0. 10, and aim = 0.20, For any given Rr-equals o a.-0.15; has experienced a negative aggregate demand shock b. 0.05; has experienced a positive aggregate demand shock 0 c. 1.05; has experienced a positive aggregate demand shock d0.45; has experienced a positive aggregate demand shock e.0; is in its long-run equilibrium

Explanation / Answer

21.

ac=0.6

ag=0.20

ai=0.20

aex=0.10

aim=0.20

ac+ai+ag+aex-aim=0.60 +0.20+0.20+0.10-0.20

=0.90

It means total autonomous expenditure (a bar) is 0.90, it means the economy is experiencing positive aggregate demand shock.

Hence it can be said that (a bar) is 0.90 and the economy has experienced a positive aggregate demand shock.

Hence option d is the correct answer.

22.

ac=0.75

ag=0.20

ai=0.15

aex=0.10

aim=0.20

ac+ai+ag+aex-aim=0.75 +0.15+0.20+0.10-0.20

=1.0

It means total autonomous expenditure (a bar) is 1.0, it means the economy is experiencing positive aggregate demand shock.

Hence it can be said that (a bar) is 1.0 and the economy has experienced a positive aggregate demand shock.

Since no option contains (a bar)=1.0

It means all the given option are not correct.

For being the correct answer (a bar) must be 1.0

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