{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Assign5-A_Key - University of Southern California...

Info icon This preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
University of Southern California Department of Economics ECON 205 Principles of Macroeconomics Spring 2009 Prof. Safarzadeh Assignment # 5 Student Name :_________________ I. In each problem below, the short-run equilibrium of the economy is illustrated by the intersection of the aggregate demand (AD) and the aggregate supply (AS), respectively. For any assumption given below, you are to illustrate the economy with the appropriately shaped AD-AS curves and the new equilibrium points. In each case, draw the shift(s) in the AD-AS curves which result from the exogenous actions taken and indicate in the space provided whether each variable will increase (+) , decrease (-) , remains unchanged (0) , or have ambiguous sign (?) . Please number the curves so that the direction of each shift will be clear. Mark the original equilibrium by E 1 and the final equilibrium by E 2 or E 3 . Unmarked graphs will be discounted in credit. 1. Government increases spending. AD shifts right, GDP +, U -, P +, i +, I? 2. Fed increases money supply. AD shifts right, GDP +, U -, P +, i -, I+. 3- Fed increases discount rate
Image of page 1

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

View Full Document Right Arrow Icon
AD shifts left, GDP -, U +, P -, i +, I-. 4- Consumer confidence is rising and stock market indices are increasing. AD shifts right (twice), GDP +, U -, P +, i +, I? 5- The government proposed tax cut is approved by congress. AD shifts right, GDP +, U -, P +, i +, I?
Image of page 2
6- To stimulate the economy government cuts taxes and Fed lowers discount rate. AD shifts right (twice), GDP +, U -, P +, i ?, I? or +. 7- OPEC increases oil prices. Fed decreases discount rate.
Image of page 3

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

View Full Document Right Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern