Explain the components of lei index

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Introduction to Economic Fluctuations

1. Explain the following components of LEI index: a. Average workweek in manufacturing b. Index of stock prices c. Index of consumer expectations d. M2

2. Explain the slope of the aggregate demand (AD) curve using the quantity theory equation.

3. Suppose that the government reduces the money supply to reduce inflation. Using graphs, illustrate the impact of this policy on output and inflation both in the short-run and in the long run. State what would happen to unemployment. 10. Read the case study titled "A Monetary Lesson from French History" from Chapter 10 (Mankiw). Was the government successful in its goal to reduce inflation? Why was the government successful/unsuccessful?

4. Suppose there is an exogenous increase in the velocity of money. Show graphically what would happen to output and inflation in the short-run and in the long run. Also mention what would happen to unemployment.

5. Suppose workers have unionized and have bid up their wages. Explain graphically the impact of this event on output and inflation. What sort of stabilization policy would you suggest to restore the economy?

Reference no: EM13799023

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