The first tool for use by the hypothetical country’s government in stabilizing the economy is increasing taxes. Increased taxes ensure that a lesser amount is left to the citizens to purchase real goods and services. Consequently, the amount circulating in the economy is substantially reduced, hence reducing inflation. The second tool that the country’s government can use to address the present inflation issue is cutting spending. The government can initiate expenditure cutting by lowering debt successes and lowering the citizens’ wage rates so that they do not have too much money to spend.
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?
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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 specific fiscal policy tools does the government have available, and how should these tools be utilized to maximize their effect in stabilizing 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. 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? 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-be/
References
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 specific fiscal policy tools does the government have available, and how should these tools be utilized to maximize their effect in stabilizing 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-be/.
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 specific fiscal policy tools does the government have available, and how should these tools be utilized to maximize their effect in stabilizing 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-be/.
Bibliography
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 specific fiscal policy tools does the government have available, and how should these tools be utilized to maximize their effect in stabilizing 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-be/.
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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?" 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-be/.