Question

(1 pts) Do you think the typical time lag for fiscal policy is likely to be longer or shorter than the time lag for monetary policy? Explain your answer?

(2 pts) What is the difference between discretionary fiscal policy and automatic stabilizers?
(2 pts) In a booming economy, is the federal government more likely to run surpluses or deficits? What are the various factors at play? Be careful here... think economically and not what the political environment would be in the United States.
(3 Pts) Specify whether expansionary or contractionary fiscal policy would seem to be most appropriate in response to each of the situations below and sketch a diagram using aggregate demand and aggregate supply curves to illustrate your answer:
A recession.
A stock market collapse that hurts consumer and business confidence.
Extremely rapid growth of exports.
Rising inflation.
A rise in the natural rate of unemployment.
A rise in oil prices.

Answer 1

Answer:Monogram bags is Qd = 10 000 + 0.5I + 0.4A – 200P The supply of Monogram bags is Qs = –15 000 + 100P where Q is the quantity per year, P is price, I is income per household and A is advertising expenditure.

Step-by-step explanation:

2.1 Louis Vuitton, a designer of luxury goods, is interested in analysing the domestic market for Monogram bags. The staff estimated the following equations for the demand and supply of Monogram bags: The demand for