Any help with 1-5? SECTION # Print Last Name, First Name MONETARY AND FISCAL POL

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Any help with 1-5? SECTION # Print Last Name, First Name MONETARY AND FISCAL POLICIES Use the graph below to answer questions 1 -s SRAS Price Level AD Q ON Real GDP The economy represented by the above graph is experiencing a(n): a. monetary gap. b. structural gap. c. recessionary gap. d. inflationary gap. 1 Afiscal policy solution to this problem might include: a. increasing taxes. b. increasing government expenditures. c. decreasing the federal funds rate target. d. decreasing the discount rate. 2. A monetary policy solution to this problem might include: a. decreasing taxes. b. increasing government expenditures. c. increasing the federal funds rate target. d. decreasing the discount rate. 3. 4 To help alleviate this situation, the President and Congress might: a. raise tax rates for each income tax bracket. b. increase the amount of time an unemployed worker can collect benefits. c. decrease the standard deduction to increase d. income taxes for many families. postpone plans to build and improve interstate highways. 5. To help alleviate this situation, the Federal Reserve might: a. b. lower the discount rate. lower the federal funds rate target. c. conduct an open market purchase of government bonds. do all of the above. 229 Chapter 11 Assignments

Explanation / Answer

Answer.)

Q1.) C.) recessionary gap

QN represents long-run output level. output level lower than QN is a recessionary gap.

Q2.) B.) Increasing Government expenditures

The expansionary fiscal policy helps in the recessionary gap to fill it.

Q3.) D.) Decreasing the discount rate

The expansionary monetary policy also helps in the recessionary gap to motivate aggregate demand so that the gap could be filled.

Q4.) B.) Increase the amount of time an unemployed worker can collect benefits

Any contractionary policy would make this situation even worse.

Q5.) D.) Do all of the above

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