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

Large department store, Suppose in a large department store, the average nu...

Suppose in a large department store, the average number of shoppers is 448, with a standard deviation of 21 shoppers. We are interested in the probability that a random sample of 4

Demand for running shoes is highly inelastic, Assume that the demand for ru...

Assume that the demand for running shoes is highly inelastic and the supply curve for running shoes is highly elastic. Suppose that the tastes of the exercising public shift away f

Problem with the keynesian model, The problem with the Keynesian model ...

The problem with the Keynesian model We can classify two problems with the Keynesian model as developed so far: 1. Π is exogenous. Although inflation may temporarily deviate

find the nash equilibria for all possible parameter, Two animals are fight...

Two animals are fighting over a prey. The prey is worth v to each animal. The cost of fighting is c1 for the first animal (player 1) and c2 for the second animal (player 2). If the

Consumption function in the IS-LM model, Q. Consumption function in the IS-...

Q. Consumption function in the IS-LM model? The consumption function will be the same as in cross model, consumption will depend positively on Y. In the classical model, consum

Mutual funds was taken, A sample of 57 mutual funds was taken and the mean ...

A sample of 57 mutual funds was taken and the mean return in the sample was 14.1% with a standard deviation of 9.2%. The return on a particular index of stocks (against which the m

What is price level, The price level is the monetary value of a good or ser...

The price level is the monetary value of a good or service.

Define demand-side growth, Define demand-side growth First, demand-si...

Define demand-side growth First, demand-side growth is caused by a change in one of the components of aggregate demand. If any of the components enhances (investment, consump

the status of the budget balance, The following table have data for a hypo...

The following table have data for a hypothetical open economy. The amount of investment spending is unknown. Question: What is the level of private savings? Question: Wh

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