Question 1

What happens to investment spending when the price level rises? Explain and illustrate using a loanable funds market graph.

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Question 2

Suppose that the dictator of a small country decides that all prices both inputs and outputs) must be fixed by contract each year and then renegotiated at the end of each year. What does this imply about short-run aggregate supply SRAS)?

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Question 3

During the early 2000s, housing prices increased by record amounts in many parts of the United States. What was the likely impact on the aggregate demand curve?

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Question 4

An increase in the minimum wage leads to an increase in the unemployment rate for unskilled workers. How is this likely to impact equilibrium output and the price level in the short run?

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Question 5

During the latter part of the 1990s, firms purchased new computer systems so that they could establish web sites and eventually online ordering systems. How is this likely to impact the aggregate demand curve and the loanable funds market?

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Question 6

What happens to consumption spending when the price level rises? Explain.

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Question 7

During the latter part of the 1990s, firms purchased new computer systems so that they could establish web sites and eventually online ordering systems. How is this likely to impact the short-run and
long-run aggregate supply?

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Question 8

The table identifies annual gross domestic product GDP) in billions of dollars) for country X. $$\begin{array} { l l l l } 
\hline \text { Year } & \text { GDP } & \text { Year } & \text { GDP } \
\hline 2006 & 1,107 & 2011 & 2,614 \
2007 & 1,397 & 2012 & 2,460 \
2008 & 1,695 & 2013 & 2,465 \
2009 & 1,667 & 2014 & 2,417 \
2010 & 2,208 & 2015 & 1,774 \
\hline
\end{array}$$ Based on the table, during which years) was the country in a recession?

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Question 9

New drilling technologies lead to a 50 percent increase in oil reserves. How will this impact equilibrium output and the price level?

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Question 10

If there is a shift in the long-run aggregate supply LRAS) curve, does the short-run aggregate supply SRAS) curve also shift? What if the SRAS curve shifts? Does this cause a shift in LRAS?

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Question 11

Suppose that after living through the great recession of 2007-2009, people decide to save a greater percentage of their incomes. How does this impact the loanable funds market and the aggregate demand curve?

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Question 12

Consider shifts in aggregate demand that push the level of real GDP GDP) away from the level of potential output. Explain why, in the long run, RGDP will always return to potential output.

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Question 13

A greater percentage of graduating seniors at all levels) are able to find a satisfactory job within two months of graduation. How is this likely to impact equilibrium output and the price level in the short run?

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Question 14

Why would a change in the price level lead to a change in interest rates?

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Question 15

What happens to net export spending when the price level rises? Explain.

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Quiz 13: The Aggregate Demandaggregate Supply Model