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Econ 199 Assignment 3

Econ 199 Assignment 3 - Econ 199 Macroeconomic Theory I...

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Econ 199 Macroeconomic Theory I Assignment 3 (Chapter 7, 8, 9) Due: in TA’s tutorial, May 7th, 2009, Thursday 1. Label each of the following statement true, false, or uncertain. Explain briefly. a) The aggregate demand relation slopes down, because at a higher price level, consumers want to purchase few goods. b) Fiscal policy cannot affect investment in the medium run, because output always returns to its natural level. c) The aggregate supply relation is consistent with the Phillips curve observed before 1970, not but since. d) During periods of depression, the Phillips curve relation still holds e) According to the Okun’s law, an increase of output growth will lead to a one for one decrease in unemployment rate. f) In the medium run, the real money growth is equal to the normal growth rate. g) According to Robert Lucas and Thomas Sargent, a faster disinflation is going to result in a smaller sacrifice ratio. 2. Question 7 of Chapter 7 in the textbook.
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