Economics_2020_wrksht_2

Economics_2020_wrksht_2 - Worksheet #2 Macro Economics 2020...

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Worksheet #2 Macro Economics 2020 AGGREGATE SUPPLY AND AGGREGATE DEMAND 1. In year zero, AS and AD curves cross at the full employment level of output. In year one the Peak Economy had 3% AS growth and 6% AD growth. In year two the Downturn economy has 3% AS growth and 0% AD growth. Using the AS and AD curves, graph the change from year 0 to year 1 to year 2. Make sure to indicate the change in full employment output, actual output and inflation. In the downturn economy is there excess capacity? 2. If we are on the portion of the aggregate supply curve in which there is excess capacity then a. can increase output and will have inflation b. can decrease output and will have inflation c. can increase output and will not have inflation d. we are at the full employment output 3. If firms expand output beyond the full employment level then a. GDP increases and unemployment decreases and prices do not rise b. GDP decreases and unemployment increases and prices do not rise c. GDP increases and unemployment decreases and prices rise
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This test prep was uploaded on 04/15/2008 for the course ECON 2020 taught by Professor Kaplan,jul during the Spring '08 term at Colorado.

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Economics_2020_wrksht_2 - Worksheet #2 Macro Economics 2020...

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