CPA1 Spring

CPA1 Spring - (Read the entire subsection, but focus on the...

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ECO412 CPA 1 __ __________ for Monday, January 14 Name Read in the Hubbard text Ch. 25, A @ pp. 588-605. Do NOT get bogged down (just keep reading) in the discussion of short-run aggregate supply on pp. 593-598. 1. Aggregate Demand: What four components (of expenditures) make up aggregate demand? What is the aggregate demand curve? Graph the aggregate demand curve. 2. The aggregate demand curve has a negative slope. Why does an increase in the price level decrease the aggregate quantity of goods & services demanded? Briefly summarize the reasons on the 2 nd half of p. 589. 3. What factors shift the aggregate demand curve? Table 25.1 will help. 4. Aggregate Supply: Define aggregate supply. In one graph, draw the short-run aggregate supply curve and the long-run aggregate supply curve, and denote the full employment level of output, Y * . 5. Short-run aggregate supply has a positive slope. In the new classical view, briefly explain why an increase in the actual price level increases the aggregate quantity of output supplied?
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Unformatted text preview: (Read the entire subsection, but focus on the last paragraph.) 6. In the new Keynesian view, why may monopolistically competitive firms not continuously adjust their prices? 7. List the three factors that shift the short-run aggregate supply curve? Why does an increase in these factors cause the short-run aggregate supply curve to shift up and to the left? 8. List the two factors that shift the long-run aggregate supply curve? Why does an increase in each of these factors cause the long-run aggregate supply curve to shift outward? Lastly, list the four principal sources of productivity growth. 9. Starting in long-run equilibrium, graph and briefly explain the short-run effect and the long-run effect on the price level and real GDP of an increase in aggregate demand. 10. Do changes (shifts) in aggregate demand affect real GDP in the long run? The price level in the long run? Support your answer using the aggregate demand-aggregate supply model....
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This homework help was uploaded on 04/18/2008 for the course ECON 412 taught by Professor Gillette during the Spring '08 term at Kentucky.

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CPA1 Spring - (Read the entire subsection, but focus on the...

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