Question 1

Using the aggregate demand and aggregate supply model, a decrease of what curve is by itself consistent with the changes in prices and output that occurred during the onset of the Great Depression?

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Question 2

Make a list of expenditures whose sum equals GDP.

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Question 3

Figure 33-12 -Refer to Figure 33-12. Suppose the economy starts at P₃ and Y₂. If there is a decrease in government purchases, identify the price and output levels that the economy would move to in the short run.

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The answer of Figure 33-12
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-Refer to Figure 33-12....

Question 4

What variables besides real GDP tend to decline during recessions? Given the definition of real GDP, argue that declines in these variables are to be expected.

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Question 5

Who is credited for the original development of the model of aggregate demand and aggregate supply?

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Question 6

Who said about classical economic theory: "the long run is a misleading guide to current affairs. In the long run we are all dead"?

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Question 7

During periods of stagflation, what happens to output and prices in the economy?

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Question 8

What do most economists believe concerning the relation between the price level and real output?

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Question 9

Who wrote the 1936 book titled The General Theory of Employment, Interest, and Money?

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Question 10

Make a list of things that would shift the long-run aggregate supply curve to the right.

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Question 11

The long-run trend in real GDP is upward. How is this possible given business cycles? What explains the upward trend?

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Question 12

Illustrate the classical analysis of growth and inflation with aggregate demand and long-run aggregate supply curves.

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Question 13

In the aggregate demand and aggregate supply model, the point where the aggregate demand curve crosses the long run aggregate supply curve, and the expected price level equals the actual price level, is known as what?

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Question 14

Explain how an increase in the price level changes interest rates. How does this change in interest rates lead to changes in investment and net exports?

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Question 15

Explain the effect on output and price level from an increase in the short-run aggregate-supply curve.

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Question 16

Compare changes in the price level for a recession resulting from a shift in aggregate demand to that of a recession resulting from a shift in short run aggregate supply.

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Question 17

Using the aggregate demand and aggregate supply model, an increase in what curve is by itself consistent with the changes in prices and output that occurred during World War II?

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