worksheet 8 - a cocktail napkin, and it isnt funny.) 4. How...

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Introduction to Macroeconomics Econ 104 a,c,d,e,f – Spring 2010 Worksheet 8 – Supply-Side Economics, Unemployment and Inflation 1. What are things that can shift the AS curve? What has happened to productivity in the U.S over the last 40 years? A supply shock or a cost-push inflation can cause the AS curve to shift. Over the last 40 years oil prices increased which lead to increase in energy costs, air transportation, hotel accommodations, and even clothing. 2. What were the main economic problems of 1979,80? 3. Look at the following graph and describe it. (Hint: it was originally drawn on the back of
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Unformatted text preview: a cocktail napkin, and it isnt funny.) 4. How did President Reagan say he could fix the economy? (with the help of his supply side economist friends?) What did supply-side policy promise? 5. Did supply-side policy work for the economy? 6. Where did Supply-side policy have a lasting impact? 7. What are the two main causes of inflation? 8. Why does Keynesian policy fail to deal with unemployment and inflation at the same time? How can it deal with unemployment and too little inflation, or deflation, like the U.S. is experiencing today, at the same time?...
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worksheet 8 - a cocktail napkin, and it isnt funny.) 4. How...

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