Drop down options, falls/rises.
Drop down options, Decrease/Increase/No effect
Drop down options, is not/is
Drop down options, fall/rise
First row of drop down options, decreases/remains unchanged/increases
Second row of drop down options, unchanged/higher/lower
Drop down options, decreases/increases, falls/rises, and right/left
Discussion Questions: Need Responses about 150 to 200 words a piece
1. Keynes thought that the behavior of the economy in the short run was influenced by what he called “animal spirits.” By this he meant that business people sometimes felt good about the economy, and carried out lots of investment, and at other times felt bad about the economy, and so cut back on their investment spending. Explain how such fluctuations in investment would lead to fluctuations in real GDP and prices.
2. Hello class
On August 2 The IMF Governors Approve a Historic US$650 Billion SDR Allocation of Special Drawing Rights. What in the world are special drawing rights. This is something you should know if you are studying economics.
Need to Comment on discussion questions below: About 100 to 150 words a piece
1. A recession is when there is an economic decline in which trade and industrial activity are reduced. During a recession the price level decreases. The pricing of products depends solely on the product itself. Some things are a more necessity and many people during a recession are less likely to buy things they want and not need due to money issues. If the government did not do anything, the economy could get back to it natural rate of output by allowing the economy to slowly build with the lower prices. Many times prices need to be adjusted to attract more people to buy items to increase the money in the economy to pull out of a recession (Ozyasar, 2016).
2. If there was a decrease in demand for goods and services that pushes the economy into a recession, the best way to describe this short-run fluctuation is through the model of aggregate demand and aggregate supply (Mankiw, 2021). When an economy is not expanding, it will go through a contraction period where goods are unable to be sold, and unemployment rises. Two main variables affect the short-run economic fluctuations. First, the output of goods and services is measured by GDP, and the average level of prices is measured by the CPI or GPD deflator. The price level is also decided upon the demand in the economy, and if the demand falls, the price will trail along with it down. If the government does nothing, the economy could slowly come back to normal and still grow the GDP each year. Prices and wages will adjust accordingly, gradually shifting the aggregate supply curve to the right. Flexible prices will also help the economy recover along with flexible wages.
3. If people feel good about the economy they tend to spend more which in turn will raise the price level and the real GDP. The AD curve is moved to right when people spend more. On the opposite effect, if people do not feel good about the economy the curve is shifted to the left and the price level and the real GDP are lower then before. Keynes stated that businesses and investors taking advantage of the lower prices in their own self interest would bring the state to an equilibrium which would boost the economy and help get out of the recession/depression (The Investopedia Team, 2020).
Sample Solution
The previous module explored how price affects the quantity demanded and the quantity supplied. The result was the demand curve and the supply curve. Price, however, is not the only factor that influences demand, nor is it the only thing that influences supply. For example, how is demand for vegetarian food affected if, say, health concerns cause more consumers to avoid eating meat? How is the supply of diamonds affected if diamond producers discover several new diamond mines? What are the major factors, in addition to the price, that influence demand or supply?
