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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. How will the use of the fiscal policy tools stabilize 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. How will the use of the fiscal policy tools stabilize the economy?

Using the two fiscal policy tools will stabilize the economy by reducing inflation rates. The government will realize fewer budget deficits, and the national debts will reduce. Therefore, the country will become self-sufficient economically and be able to finance its financial needs without unnecessary constraints involving taking debts and having budget deficits.

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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. How will the use of the fiscal policy tools stabilize the economy'. 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. How will the use of the fiscal policy tools stabilize the economy? 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-5/

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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. How will the use of the fiscal policy tools stabilize the economy?" 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-5/.

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. How will the use of the fiscal policy tools stabilize the economy?" 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-5/.


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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. How will the use of the fiscal policy tools stabilize the economy?" 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-5/.

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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. How will the use of the fiscal policy tools stabilize the economy?" 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-5/.

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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 would be the likely impact on the government budget and national debt of the use of the fiscal policy tools?
Forecast future financial results as to how would you do this using what you learnt in the subject? Provide at least 3 ways. Describe how accurate do you think that your forecasts would be? Describe why you have answered as you have.
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