PS4 - ECON1312, Section 3 and 4 03/31/08 Problem Set 4 Due...

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ECON1312, Section 3 and 4 03/31/08 Problem Set 4 Due TUESDAY 4/08/08, in class NOTE: You have the option to work in groups of up to three people and hand in one problem set per group. Question 1 Find a newspaper or magazine article published between March 1, 2008 and March 31, 2008 describing an event that may affect the U.S. price level and real GDP. Draw an initial set of AD and AS curves, then determine which curve will be affected, and in which direction it will shift. What do you predict will happen to the price level and real GDP? Your answer must include a short summary of the article and an explanation of how the event affects AD or AS (you should also attach a copy of the article). Question 2 a) Use aggregate supply and demand analysis to explain the macroeconomic consequences of a doubling in the price of oil due to military conflicts in the Middle East. b) Assume that the President Bush says that he wants to follow accommodative economic policy in response to the changes in part a). What fiscal policies would you suggest be used?
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PS4 - ECON1312, Section 3 and 4 03/31/08 Problem Set 4 Due...

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