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Using an aggregate demand and supply diagram, explain how each of the following scenarios affects the equilibrium price level and aggregate output. Consider first the short-run, then the long-run equilibrium for each scenario.
a) Consumers expect a recession, while resource prices rise at the same time.
b) Foreign income falls as domestic technology improves.
c) Foreign price level rises as domestic government cuts taxes.
d) Government spending falls and a higher future price level is expected.
e) Higher future income and lower price level are expected.
f) Resource prices fall and technology improves.
Explain the difference among saving and investment as explained by macroeconomists. Which of the following situations represent investment or saving? Explain: a) You u
If a government finances an increase in its expenditures by selling bonds to the public, then the aggregate demand curve will: A. not shift. B. shift out more if crowding out occur
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The cash flows (CF t ) associated with an investment are listed below (assume that each cash flow occurs at the beginning of each year): CF 0 = -200
If demand increases and the supply increases also, then what will happen to the new equilibrium price and equilibrium quantity? Explain what is happening with the curves and how pr
when the income velocity of circulation (V) rises, why does the economy''s total output must rise?
This problem revolves around determining the LM curve, as we did earlier in the term such that money demand (M D ) equals money supply (M S ), however in this instance under differ
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Let the real interest rate, i r , equal 5 percent and the rate of depreciation, d, equal 10 percent. In this case, if the price of a piece of capital is P K = $10,000, what is th
Statics and Dynamics Economic models deal with stock and flow variables. These variables can be in one of the two states - equilibrium or disequilibrium - at a particular poin
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