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Home/Business & Economics/Suppose the economy of a hypothetical country has reached its long-run macroeconomic equilibrium when each of the following aggregate demand shocks occurs. The economy of a hypothetical country has been stable for two or three years with deficient unemployment. Wages have been gradually increasing during this time. Now stock market prices begin significant increases, causing peoples’ investments, such as their retirement accounts and other investments, to increase in value. People feel very good about the future and use their newfound wealth to buy things that they had been hesitant to purchase in the past. What kind of fiscal policy might be helpful to stabilize the economy (expansionary or contractionary)?

Suppose the economy of a hypothetical country has reached its long-run macroeconomic equilibrium when each of the following aggregate demand shocks occurs. The economy of a hypothetical country has been stable for two or three years with deficient unemployment. Wages have been gradually increasing during this time. Now stock market prices begin significant increases, causing peoples’ investments, such as their retirement accounts and other investments, to increase in value. People feel very good about the future and use their newfound wealth to buy things that they had been hesitant to purchase in the past. What kind of fiscal policy might be helpful to stabilize the economy (expansionary or contractionary)?

The government can address the inflationary economic gap in the hypothetical country by using a contractionary fiscal policy. The country’s government can use several contractionary budgetary policies to address the upcoming situation. The first alternative is transferring payment reduction so that the citizens’ earnings reduce and their demands drop. The second alternative that the government can consider is increasing taxes. Increased taxes will leave the citizens with lower net incomes and reduce their spending on products and services. The third contractionary fiscal policy that the government may consider is reducing government spending.

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Academic.Tips. (2022) 'Suppose the economy of a hypothetical country has reached its long-run macroeconomic equilibrium when each of the following aggregate demand shocks occurs. The economy of a hypothetical country has been stable for two or three years with deficient unemployment. Wages have been gradually increasing during this time. Now stock market prices begin significant increases, causing peoples' investments, such as their retirement accounts and other investments, to increase in value. People feel very good about the future and use their newfound wealth to buy things that they had been hesitant to purchase in the past. What kind of fiscal policy might be helpful to stabilize the economy (expansionary or contractionary)'. 3 November.

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Academic.Tips. (2022, November 3). Suppose the economy of a hypothetical country has reached its long-run macroeconomic equilibrium when each of the following aggregate demand shocks occurs. The economy of a hypothetical country has been stable for two or three years with deficient unemployment. Wages have been gradually increasing during this time. Now stock market prices begin significant increases, causing peoples' investments, such as their retirement accounts and other investments, to increase in value. People feel very good about the future and use their newfound wealth to buy things that they had been hesitant to purchase in the past. What kind of fiscal policy might be helpful to stabilize the economy (expansionary or contractionary)? https://academic.tips/question/suppose-the-economy-of-a-hypothetical-country-has-reached-its-long-run-macroeconomic-equilibrium-when-each-of-the-following-aggregate-demand-shocks-occurs-the-economy-of-a-hypothetical-country-has-b-2/

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Academic.Tips. 2022. "Suppose the economy of a hypothetical country has reached its long-run macroeconomic equilibrium when each of the following aggregate demand shocks occurs. The economy of a hypothetical country has been stable for two or three years with deficient unemployment. Wages have been gradually increasing during this time. Now stock market prices begin significant increases, causing peoples' investments, such as their retirement accounts and other investments, to increase in value. People feel very good about the future and use their newfound wealth to buy things that they had been hesitant to purchase in the past. What kind of fiscal policy might be helpful to stabilize the economy (expansionary or contractionary)?" November 3, 2022. https://academic.tips/question/suppose-the-economy-of-a-hypothetical-country-has-reached-its-long-run-macroeconomic-equilibrium-when-each-of-the-following-aggregate-demand-shocks-occurs-the-economy-of-a-hypothetical-country-has-b-2/.

1. Academic.Tips. "Suppose the economy of a hypothetical country has reached its long-run macroeconomic equilibrium when each of the following aggregate demand shocks occurs. The economy of a hypothetical country has been stable for two or three years with deficient unemployment. Wages have been gradually increasing during this time. Now stock market prices begin significant increases, causing peoples' investments, such as their retirement accounts and other investments, to increase in value. People feel very good about the future and use their newfound wealth to buy things that they had been hesitant to purchase in the past. What kind of fiscal policy might be helpful to stabilize the economy (expansionary or contractionary)?" November 3, 2022. https://academic.tips/question/suppose-the-economy-of-a-hypothetical-country-has-reached-its-long-run-macroeconomic-equilibrium-when-each-of-the-following-aggregate-demand-shocks-occurs-the-economy-of-a-hypothetical-country-has-b-2/.


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Academic.Tips. "Suppose the economy of a hypothetical country has reached its long-run macroeconomic equilibrium when each of the following aggregate demand shocks occurs. The economy of a hypothetical country has been stable for two or three years with deficient unemployment. Wages have been gradually increasing during this time. Now stock market prices begin significant increases, causing peoples' investments, such as their retirement accounts and other investments, to increase in value. People feel very good about the future and use their newfound wealth to buy things that they had been hesitant to purchase in the past. What kind of fiscal policy might be helpful to stabilize the economy (expansionary or contractionary)?" November 3, 2022. https://academic.tips/question/suppose-the-economy-of-a-hypothetical-country-has-reached-its-long-run-macroeconomic-equilibrium-when-each-of-the-following-aggregate-demand-shocks-occurs-the-economy-of-a-hypothetical-country-has-b-2/.

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"Suppose the economy of a hypothetical country has reached its long-run macroeconomic equilibrium when each of the following aggregate demand shocks occurs. The economy of a hypothetical country has been stable for two or three years with deficient unemployment. Wages have been gradually increasing during this time. Now stock market prices begin significant increases, causing peoples' investments, such as their retirement accounts and other investments, to increase in value. People feel very good about the future and use their newfound wealth to buy things that they had been hesitant to purchase in the past. What kind of fiscal policy might be helpful to stabilize the economy (expansionary or contractionary)?" Academic.Tips, 3 Nov. 2022, academic.tips/question/suppose-the-economy-of-a-hypothetical-country-has-reached-its-long-run-macroeconomic-equilibrium-when-each-of-the-following-aggregate-demand-shocks-occurs-the-economy-of-a-hypothetical-country-has-b-2/.

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Suppose the economy of a hypothetical country has reached its long-run macroeconomic equilibrium when each of the following aggregate demand shocks occurs. The economy of a hypothetical country has been stable for two or three years with deficient unemployment. Wages have been gradually increasing during this time. Now stock market prices begin significant increases, causing peoples' investments, such as their retirement accounts and other investments, to increase in value. People feel very good about the future and use their newfound wealth to buy things that they had been hesitant to purchase in the past. What specific fiscal policy tools does the government have available, and how should these tools be utilized to maximize their effect in stabilizing the economy?
Suppose the economy of a hypothetical country has reached its long-run macroeconomic equilibrium when each of the following aggregate demand shocks occurs. The economy of a hypothetical country has been stable for two or three years with deficient unemployment. Wages have been gradually increasing during this time. Now stock market prices begin significant increases, causing peoples' investments, such as their retirement accounts and other investments, to increase in value. People feel very good about the future and use their newfound wealth to buy things that they had been hesitant to purchase in the past. What kind of economic gap will start to occur (inflationary or recessionary)?
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