Can someone help me get 43 (39) In an \"aggregate-demand (AD)-aggregate-supply (

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Can someone help me get 43

(39) In an "aggregate-demand (AD)-aggregate-supply (AS)" framework, the stagnation and inflation) is explained by (a) Simultaneous increases in AD and AS. (b) Simultaneous decreases in AD and AS. (e) Increases in AD and decreases in AS (d) Decreases in AD. (e) Decreases in AS (40) One of the reasons the AD curve is usually drawn with a negative slope (i.e., it goes from northwest to southeast) is (a) The law of demand: people generally buy more goods and services at (b) The wealth effect: at lower price levels the real value of dollar- lower prices, and vice versa. denominated assets (especially money!) rises; People are wealthier and spend more. (c) The "crowding out" effect: at higher price levels individuals and firms must reduce their spending but government does not. Hence some private expenditures are "crowded out. All of the above. (d) (e) None of the above (41) Assume Arkania has a money supply (M) of $800 billion (Arkanian dollars) and a GDP of $1,600 billion. The price level (P) in Arkania equals 4. The country's income velocity of money" must be: (a) 4 (b) 6. c) 16ofthe (d) 16. (e) None of the above. (42) Consider a simple income-expenditure (Keynesian cross") type of model. The equilibrium level of real GDP (RGDP) in Gargantua is $6,400 billion. Then "autonomous spending" rises by $20 billion. The "marginal propensity to consume" (MPC) is 0.8. Gargantua's new equilibrium level of RGDP will be (a) $6,416 billion. (b) $6,420 billion. (c) $6,480 billion. (d) $6,500 billion. (e) $6,540 billion.

Explanation / Answer

43)Ans is B

Initial equilibrium Gdp=6400

Full employment level/GDP=6800

There is output GDP=6800-6400=400 and mpc=0.8 then multiplier=1/1-mpc=1/1-0.8=5

Recessionary gap=output gap/multplier=400/5=80

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