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
This
preview
has intentionally blurred sections.
Sign up to view the full version.

This is the end of the preview.
Sign up
to
access the rest of the document.
- Spring '08
- KAPLAN,JUL
- Economics, Macroeconomics, government spending
-
Click to edit the document details