Reference no: EM13732118

Part -1:

1. What are the three goals of Macro Economics and how are they measured?

2. What are the components of Aggregate demand and how is it calculated?

3. What is a Monetary policy and what is the most frequently used tool/type used?

4. What are the primary Fiscal Policies and what component of AD are they designed to influence?

Part -2:

1. Describe Expansionary fiscal and Contractionary fiscal policies make sure to include actions and problem they are designed to solve?

2. What advantage does using money have over the barters system and name and describe the three functions of money?

3. List and define the monetary tools and state the actions taken to increase the money supply (hint: expansionary monetary policies)?

Part -3:

1. Use an aggregate supply-and-demand diagram to show what would happen to an economy in which the aggregate supply (AS) never moved while the aggregate demand curve shifted outward year after year? (Make sure to state or show what happens to GDP and price levels)?

2. What is the aggregate supply curve, what does it represent? Draw the appropriate graph to illustrate your answer. Be sure and label all axes and curves.

3. Draw the Aggregate Demand and Supply model showing the changes in Price levels and Real GDP due to a decrease in Taxes?

4. From the following data determine the equilibrium level GDP?

GDP               C                I                G        net exports

5,000           3,700         1,000           800            -200             

5,500           4,050         1,000           800            -200             

6,000           4,400         1,000           800            -200             

6,500           4,750         1,000           800            -200             

7,000           5,000         1,000           800            -200             

Part -4:

1. What fiscal policy (or policies) is/are typically used to close a recessionary gap? Draw the Aggregate Demand and Supply model showing the changes in Price levels and Real GDP - make sure your illustration clearly shows the recessionary gap.

2. State a monetary policy and explain how it is used to close an inflationary gap? Draw the Aggregate Demand and Supply model showing the changes in Price levels and Real GDP - make sure your illustration clearly shows the inflationary gap.