lectureAssignment22

lectureAssignment22 - show how the equilibrium GDP and...

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ECONOMICS 100 Lecture Assignment # 22 (Aggregate Demand and Aggregate Supply in the Short Run) Source: LR11, Chapter 23; LR10 Chapter 24 (be guided by what is covered in class). 1. Aggregate Demand 1.1 What is the definition of Aggregate Demand (AD)? 1.2 Why does AD slope downward? 1.3 What will cause AD to shift? 1.4 What will cause a movement along a given AD schedule? 2. Aggregate Supply 2.1 What is the definition of Aggregate Supply (AS)? 2.2 What are the possible slopes of AS, and explanations thereof? Consider both the short run and the long run. Relate these shapes to the so-called "Classical" and "Keynesian" views of the world. 2.3 What will cause AS to shift? 2.4 What will cause a movement along a given AS schedule? 3. Equilibrium 3.1 What determines the equilibrium GDP and price level for an economy?
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4. AD / AS Examples For each of the following disturbances, considered separately, use diagrams to
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Unformatted text preview: show how the equilibrium GDP and price level would be affected in the short run: 4.1 Consumer confidence increases and the consumption function shifts up. 4.2 The money supply increases, leading to a changed interest rate. (You will later learn that an increase in the money supply pushes the interest rate down and that in turn encourages investment spending. For now, just assume an increase in desired investment spending and consider what that does to AD/AS; after we introduce a money model you will be able to do this question completely). * 4.3 New technology makes workers far more productive* * Consider only one side of the market (i.e., shift only one curve the primary, initial impact, even though there could be an argument about shifting two!)....
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lectureAssignment22 - show how the equilibrium GDP and...

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