Aggregate supply and demand, Macroeconomics

Assignment Help:

Aggregate Supply and Demand

1. The equation for expenditure GDP is

2. Sketch a fully labeled aggregate supply and demand diagram for an economy that is in full employment equilibrium.

a) Add to the diagram an aggregate demand curve that demonstrates an economy with a recessionary gap. Clearly label both the new curve and the recessionary gap.

b) FULLY explain four reasons that the aggregate demand curve might have made the above shift to the left.

c) What is the effect of this recessionary gap on real GDP, the unemployment rate, and the inflation rate?

d) Add to the diagram an aggregate demand curve that demonstrates an economy with an inflationary gap. Clearly label both the new curve and the inflationary gap.

e) What is the effect of this inflationary gap on real GDP, the unemployment rate, and the inflation rate?

3. Sketch a fully labeled aggregate supply diagram. Add to the diagram a new aggregate supply line that would occur due to an improvement in technology that improves productivity.

4. If you have not already done so, add an aggregate demand curve to the diagram in question 3. What effect did the aggregate supply curve shift have on real GDP, the unemployment rate the inflation rate?

5. Suppose an economy is operating at full employment equilibrium. What component of the GDP will be affected and what will happen to real GDP, the unemployment rate, and the inflation rate levels in the face of each of the following events?

a) an increase in income taxes

b) an increase in business investment

c) the price of raw materials used in the production process increases

d) an increase in the value of the Canadian dollar

e) a decrease in interest rates

f) productivity improves as new technology is introduced

g) a decrease in highway improvement projects by the government

h) an increase in consumer savings

i) the economic climate in Canada looks strong

j) an increase in import spending


Related Discussions:- Aggregate supply and demand

Firms use crowd sourcing technique, Thread less is an example of a firm bui...

Thread less is an example of a firm building on its customer base to use new products and also to participate in the design and vetting of popular designs. In the summer of 2010, D

Inflation in sweden, Inflation in Sweden Figure Inflation in Swed...

Inflation in Sweden Figure Inflation in Sweden 1830 - 2010. Source: SCB. There are four aspects which are interesting when we look at inflation data for Sweden

Difficulties in measuring the national income, DIFFICULTIES IN MEASURING TH...

DIFFICULTIES IN MEASURING THE NATIONAL INCOME  There are some conceptual and statistical problems in measuring national product. Some items are excluded from the national incom

Discuss about asymmetric information, A) With asymmetric information, free ...

A) With asymmetric information, free markets may not lead to efficient outcomes because the market for a service or product may break down due to adverse selection. Explain what ad

What is productivity or average product, What is productivity? Produ...

What is productivity? Productivity or average product (AP): It is output person which is output divided through number of workers AP= Q/L. There labour Productivity can

Find the equilibrium quantity, Find the Equilibrium Quantity In a smal...

Find the Equilibrium Quantity In a small town only two candy shops operate and they compete with each other in quantity. Consumers do not differentiate between candies sold by

Output-maximizing model, For a single nonprofit provider, describe an outpu...

For a single nonprofit provider, describe an output-maximizing model to predict supplier behavior.

Annual fixed cost for a light fixture, The annual fixed cost for a light fi...

The annual fixed cost for a light fixture manufacturing company are $38,000, and the variable costs are $40 per unit. If the selling price per unit is p = 485 - 1.395X, what is the

Why do some countries have a low real per capita income, Why do some countr...

Why do some countries have a low real per capita income? Low real per capita income considers being largely due low productivity (i.e., output per worker) of low valued added

Arc price elasticity of demand, The Stop decay company sells an electric to...

The Stop decay company sells an electric toothbrush for $25. Its sales have averaged 8,000 units per month over the past year. Recently, its closest competitor, Decay fighter, redu

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd