TA3_GroupsEVEN

TA3_GroupsEVEN - JAN-ZB-ZOO 15:17 P.01/03 Carleton...

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Unformatted text preview: JAN-ZB-ZOO'? 15:17 P.01/03 Carleton University Department of Economics Tutorial Assignment 3 Groups 2, 4, 6, 8. 10, 12 mamm. D Smith iii-meow; 1. The economy of Mainland has the following aggregate demand and supply schedules: Real GDP demanded Real GDP supplied in the short run (billions of 1986 dollars) Price Level 90 450 350 100 400 400 110 350 450 120 300 500 130 250 550 140 200 600 (a) Plot the aggregate demand curve and short-run aggregate supply curve in a figure. (b) What is real GDP and the price level in Mainland in a short-run equilibrium? (0) Aggregate demand is increased by $100 billion. What is the new short-run equilibrium? (d) Aggregate supply decreases by $100 billion. What is the new short-run equilibrium? JAN-ZB-ZOO'? 15:17 P 02/03 instructor: D. Smith PS#3 - even Winter 520 , ' 2. The following figures shows the aggregate demand and aggregate supply curves in an economy. Initially, aggregate demand is All)o and the short-run aggregate supply curve is SASO. Then some events change aggregate demand and the aggregate demand curve shifts rightward to AD. Later, some other events change aggregate supply and the short-run aggregate supply curve shifts leftward to 8/18,. LAS SAS; Real GDP a. What is the initial equilibrium point? b. What is the short-run equilibrium point after the change in aggregate demand? What is the short~run equilibrium point after the change in aggregate _0 supply? d. What events could have changed aggregate demand form AD” to AD1 ? e. What events could have changed short-run aggregate supply from SAS0 to SAS, ? f. After the increase in aggregate demand but before the decrease in aggregate supply, is real GDP greaterthan or less than potential GDP? DflvntyiOS (Ollqupigiroll,SN . .. _ , JAN-ZB-ZOOT 15:17 P 08/03 Instructor: D. Smith PS#3 - even WinterfiQQg ________________________.._.__—u——-——~——————-~ ' 3. You are the Prime Minister's economic advisor and you are trying to figure out where the Canadian economy is headed next year. You have the following forecasts for the AD, SAS, and LAS curves: Real GDP Short-run Potential GDP demanded Real GDP supplied Price Level _..___.__———w—-——————-——"———————” (billions of 1986 dollars) _________________________.___.——-—————— 1 15 650 350 520 120 600 450 520 125 550 550 520 130 500 650 520 This year, real GDP is $500 billion and the price level is 120. The Prime Minister wants answers to the following questions: (a) What is your forecast of next year's real GDP? (b) What is your forecast of next year's price level? (0) What has to be done to aggregate demand to achieve full employment? (d) What is the inflation rate if aggregate demand is manipulated to achieve full employment? 4- Explain (without algebraic expressions) why the multiplier is larger if the marginal propensity to consume is higher. 4+3 G‘llf‘ouOSatthbiftgilOtl/Q: . 7 ._ __ 7 7 ,, @ TOTAL P.03 ...
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This note was uploaded on 10/11/2011 for the course ECON ECON 1000 taught by Professor Michaelfrancis during the Fall '11 term at Carleton.

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TA3_GroupsEVEN - JAN-ZB-ZOO 15:17 P.01/03 Carleton...

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