Begins with the economy at potential gdp

Assignment Help Macroeconomics

Reference no: EM1337756

Supply and demand to explain GDP changes

1. "The aggregate demand curve slopes downward, because when the price level is lower, people can afford to buy more, and aggregate demand rises. When prices rise, people can afford to buy less, and aggregate demand falls." Is this a good explanation of the shape of the AD curve? Why or why not?

2. By using aggregate supply and aggregate demand curves to illustrate, describe the effects of the following events on the price level and on equilibrium GDP in the long run, assuming that input prices fully adjust to output prices after some lag:

A) An increase occurs in the money supply above potential GDP.

B) A decrease in government spending and in the money supply with GDP above potential GDP occurs.

C) Starting with the economy at potential GDP, a war in the Middle East pushes up energy prices temporarily. The Fed expands the money supply to accommodate the inflation.

Reference no: EM1337756

Questions Cloud

Why to prepare a powerpoint presentaion : Are there any Websites that details the attributes of an effective PowerPoint presentation. Also what in your opinion would be one or two "best practices".

How internal selection decisions differ from external : Explain how internal selection decisions differ from external selection decisions. Write down the differences among peer ratings, peer nominations, and peer rankings. Should they be used? and how this can be employed in an organization.

Skilled workers and knowledge workers : Knowledge workers dominate today's business environment. What industries still need skilled workers who are not knowledge workers?

Triump of christianity : In the 4th century, we see a "triump of Christianity" in Western civilization that would last more than 1,000 years.

Begins with the economy at potential gdp : Begins with the economy at potential GDP, a war in the Middle East pushes up energy prices temporarily. The Fed expands the money supply to accommodate the inflation.

Write down a brief summary of the web article : In this assignment, you will find out and critique virtual information and word processing skills to create a professional-looking one-page document that promotes personal development or financial growth and maturity.

Explain a new product versus an existing product : Explain a new product versus an existing product and How would the application of the marketing mix differ

Determining early and late start and finish times : Determine the early and late start and finish times and the slack times for the activities. Identify the critical path.

Illustrate what has happened to oil prices over past five yr : In your own words, discuss the economic purpose of OPEC. Illustrate what has happened to oil prices over the past five years.

User Account

All Pages