Use of discretionary policy to stabilize the economy

should the government use monetary and fiscal policy in an effort to stabilize the economy? the following questions address the issue of how monetary and fiscal policies affect the economy, and the pros and cons of using these tools to combat economic fluctuations.

the following graph shows a hypothetical aggregate demand curve (ad), short-run aggregate supply curve (as), and long-run aggregate supply curve (lras) for the u. s. economy in february 2020.

suppose the government decides to intervene to bring the economy back to the natural level of output by using (expansionary/contractionary) policy.

depending on which curve is affected by the government policy, shift either the as curve or the ad curve to reflect the change that would successfully restore the natural level of output.

Mr. smith recently faced a choice between being (a) an economics profes-sor, which pays $60,000/yr, or (b) a safari leader, which pays $50,000/yr. after careful deliberation, smith took the safari job, but it was a close call. "for a dollar more," he said, "i'd have gone the other way."now smith's brother-in-law approaches him with a business proposition. the terms are as follows: - smith must resign his safari job to work full-time in his brother-in-law's business.- smith must give his brother-in-law an interest-free loan of $100,000, which will be repaid in full if and when smith leaves the business. (smith currently has much more than $100,000 in the the business will pay smith a salary of $70,000/yr. he will receive no other payment from the business. the interest rate is 10 percent per year. apart from salary considerations, smith feels that working in the business would be just as enjoyable as being an economics professor. for simplicity, assume there is no uncertainty regarding either smith's salary in the proposed business or the security of his monetary investment in it. should smith join his brother-in-law and, if so, how small would smith's salary from the business have to be to make it not worthwhile for him to join? if not, how large would smith's salary from the business have to be to make it worthwhile for him to join?

Select all that apply. what do opponents of minimum wage believe are the results of minimum wage? increases personal income results in job shortages causes unemployment raises prices of goods

The common stock and debt of northern sludge are valued at $65 million and $35 million, respectively. investors currently require a return of 15.9% on the common stock and a return of 7.8% on the debt. if northern sludge issues an additional $14 million of common stock and uses this money to retire debt, what happens to the expected return on the stock? assume that the change in capital structure does not affect the interest rate on northern’s debt and that there are no taxes.