(a) In an economy, the goods and the capital markets are in equilibrium. But on the...

 

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(a) In an economy, the goods and the capital markets are in equilibrium. But on the money market, the supply of money is insufficient to support the current volume of transactions at the current price level. Among the points on the graph, which one is the economy at? Explain why. AD (b) The food prices have shot up unexpectedly. As a result, people end up with larger balances on their credit cards at the end of the month. Which of the effects of price on output is it? State in one sentence why it is called that. Show this event on the AD curve. Label axes, curves, and the before and after with A and B. (c) Because the food prices have grown, catering firms are having a difficult time procuring cash to fill their warehouses with sufficient food on time. Which of the effects of price on output is it? State in one sentence what the firms will do and how it is connected with the name of the effect. Show this event on the AD curve. Label axes, curves, and the before and after with A and B. (d) To address the growing food prices, the treasury is thinking of mailing people checks similarly to Trump and Biden stimuluses during covid. What kind of policy would that be? Show its effect on the AD curve. Label axes, curves, and the before and after with B and C. (a) In an economy, the goods and the capital markets are in equilibrium. But on the money market, the supply of money is insufficient to support the current volume of transactions at the current price level. Among the points on the graph, which one is the economy at? Explain why. AD (b) The food prices have shot up unexpectedly. As a result, people end up with larger balances on their credit cards at the end of the month. Which of the effects of price on output is it? State in one sentence why it is called that. Show this event on the AD curve. Label axes, curves, and the before and after with A and B. (c) Because the food prices have grown, catering firms are having a difficult time procuring cash to fill their warehouses with sufficient food on time. Which of the effects of price on output is it? State in one sentence what the firms will do and how it is connected with the name of the effect. Show this event on the AD curve. Label axes, curves, and the before and after with A and B. (d) To address the growing food prices, the treasury is thinking of mailing people checks similarly to Trump and Biden stimuluses during covid. What kind of policy would that be? Show its effect on the AD curve. Label axes, curves, and the before and after with B and C.

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a The economy is at point A on the graph This is because the supply of money is insufficient to supp... View the full answer