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ID: 1152072 • Letter: P

Question

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Part III Predict the Future Find 3 newspaper articles pertaining to anything that could impact the components of Aggregate Demand (C, I, G, or Net Exports). Use the information in these articles to make a prediction for the levels of the components of GDP and the direction GDP in the next quarter. Will it be increase or decrease in the next quarter and why? Article 1 (Title, Date, Publication Name): Article Summary: Article 2 (Title, Date, Publication Name): Article Summary: Article 3 (Title, Date, Publication Name): Article Summary: Based on your predictionsabove whatwill be the effect on the following (Explain .Aggregate Demand Overall . The unemploymentrate The price level

Explanation / Answer

Article 1=After Quantitative Easing ended, the Federal bank maintained its balance sheet at an identical level till September 2017, then it started to slowly lessen it to a more average size—a procedure which is likely to last for a few years. The Federal bank has increased ROI in the existence of a large balance sheet via the utilization of 2 new instruments—by augmenting the ROI paid to financial institutions on reserves & by involving in reverse repos via a new overnight provision. This will reduce corporate investments (I) as cost of borrowing will increase.AD will fall, unemployment will rise and price level will fall.

Article 2=The Congress approved an augmentation in governmental expenditures in 2018. Fiscal policy will give a large boost to economic growth in the forthcoming years. The spending covenant assigned a major chunk to greater defence spending and infrastructure. This will lead to increase in government spending (G) in the economy causing higher AD, increased employment and price levels.

Article 3=President D. Trump was elected mainly because of his commitment to reorganize the global trading mechanism in manners that would lead to fairer results for American workers & corporates, & more effectual markets for nations worldwide . In 2017, the Administration started to accomplish this commitment. Now we have started to amend redundant / unfair trade contracts, construct a more robust economy, practise an aggressive enforcement program , & push for substantial reform of the World Trade Organization. This will increase Net exports (NX) in US. This will in turn augment AD, employment and price levels

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