Aggregate supply and demand, Macroeconomics

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

Posted Date: 2/16/2013 12:01:58 AM | Location : United States







Related Discussions:- Aggregate supply and demand, Assignment Help, Ask Question on Aggregate supply and demand, Get Answer, Expert's Help, Aggregate supply and demand Discussions

Write discussion on Aggregate supply and demand
Your posts are moderated
Related Questions
For which of the following medical goods or services is the income elasticity of demand largest? a. emergency services after a car accident b. measles shots c. physical ex

what are the limits of the trade between franci and galacia

A brewery produces two kinds of beer, stout and IPA . Each batch of stout sells for $60 per unit while each batch of IPA sells for $108. Both products require malt, hops, barley, f

Sims (1980) introduced an exciting and ground-breaking new framework which would prove to be extremely insightful for macroeconomic analysis. This is known as vector autoregression

what does a weaker dollar to a) raise inflation and contract the economy b) reduce inflation and contract the economy c) raise inflation and expand the economy d) reduce inflation

casual factors of the traditional business cycle and its effect on sectors of the economy?

different between money multplier vs credit multplier ?

Only two identical firms i = A;B, each with marginal cost MCi = 40 and no fixed cost, operate in a market with demand: Q     p 1    160 2    120 3     90 4     70

Q. Illustrate biological effects of Patulin? Biological activity: Patulin has an acute oral LD 50 in rodents of about 30-50 mg/kg and has been shown to be teratogenic, immunot

Are there any current subsidy or welfare issues that are being discussed or addressed in parliament or in municipalities