HW3A - 9- Answer this question using the following graph....

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4 9- Answer this question using the following graph. a. In the above figure, suppose that the economy is at point A when the quantity of money increases. In the short run, the economy will move to point _B___. At the new equilibrium price has increased by _10____ % and real GDP has increased by ___20_%. The nominal GDP has increased by __30__%. b. Now, suppose that the economy is at point A when foreign countries begin an expansion and buy more U.S.-made goods. In the short run, this change creates a movement to point ___B____ and an eventual increase in _inflation______. A shift in AD from ADo to AD1 will result in what kind of inflation __demand-pull___________________. A shift in AS from SASo to SAS1 will result in what kind of inflation _____cost-push______________. II. Answer the following questions by filling in the blanks. 1. The three macroeconomic markets are _goods___________, _money____________ & _labor_______. 2. Points on AD represent equilibrium in _goods and money______________________ market(s). 3. Points in AS represent equilibrium in __labor__________________________________market(s). 4. AD/As equilibrium represents equilibrium in __all three__________________________ market(s). 5. If actual GDP is less than potential GDP, the policy maker should adopt a(n) __expansionary________ policy. 6.
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This note was uploaded on 03/08/2009 for the course ECON 20091_ECO taught by Professor Mohammadsafarzadeh during the Spring '09 term at USC.

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HW3A - 9- Answer this question using the following graph....

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