Explain why the long-run aggregate-supply curve is vertical

Assignment Help Microeconomics

Reference no: EM133932133

Assignment:

Please give a short answer to each question.

1. Name two macroeconomic variables that decline when the economy goes into a recession.

Name one macroeconomic variable that rises during a recession.

2. List and explain the three reasons the aggregate-demand curve slopes downward.

3. Explain why the long-run aggregate-supply curve is vertical. List and explain the three theories for why the short-run aggregate-supply curve slopes upward.

4. What might shift the aggregate-demand curve to the left?

5. What might shift the aggregate-supply curve to the left?

6. What is the theory of liquidity preference? How does it help explain the downward slope of the aggregate-demand curve?

7. Use the theory of liquidity preference to explain how a decrease in the money supply affects the aggregate-demand curve.

8. The government spends $3 billion to buy police cars. Explain why aggregate demand might increase by more or less than $3 billion.

9. Suppose that survey measures of consumer confidence indicate a wave of pessimism is sweeping the country. If policymakers do nothing, what will happen to aggregate demand?

What should the Fed do if it wants to stabilize aggregate demand? If the Fed does nothing, what might Congress do to stabilize aggregate demand? Explain your reasoning.

10. Give an example of a government policy that acts as an automatic stabilizer. Explain why the policy has this effect.

Reference no: EM133932133

Questions Cloud

Discuss a second-price wallet auction : Consider a second-price wallet auction. The auction is for a pot of money equal to the sum of the cash in each of the bidders' wallets.

History of archaeological thought : Theoretical approaches in interpreting the past have changed throughout the history of archaeological thought.

What makes it so difficult to forgive the other person : Is there an event in your life that you find difficult to forgive? What is it? What makes it so difficult to forgive the other person?

Discuss the evolution of bipedalism : Discuss the evolution of bipedalism. When and where does the first biped appear? What were the benefits of this method of locomotion?

Explain why the long-run aggregate-supply curve is vertical : Explain why the long-run aggregate-supply curve is vertical. List and explain the three theories for why the short-run aggregate-supply curve slopes upward.

Explain the origins of modern homo sapiens : Explain the origins of modern Homo sapiens? Which hypothesis does the majority of evidence support? Be sure to back up your answer with specific examples.

Environmental conditions that affect preservation : Explain the different environmental conditions that affect preservation of artifacts. Now imagine that you are an archaeologist working in the arid dessert of P

Discuss elements of geography and biology : Discuss elements of geography and biology that contributed to the rise of the Fertile Crescent as true origin of Western artistic culture, namely literature.

Pay equity in big-time womens college basketball : What is the main question, key issues, empirical analysis? How does the article relate to wage discrimination and pay equity?

User Account

All Pages