econ101fall11ps3 - Name: Section: T.A. Name: 180.101...

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Name: Section: T.A. Name: 180.101 ELEMENTS OF MACROECONOMICS Fall, 2011 Problem Set #3 Prof. Louis J. Maccini INSTRUCTIONS: Above, write your name, section number and T. A. name. Answer each question in the space provided, or on the back of the same sheet. 1. A decline in energy prices should reduce the average price level but otherwise leave the economy unaffected. True, false, uncertain. Explain in depth.
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2. A country is at war, and the war is going badly. A politician argues that the fact that the war is not going well has caused a “crisis of confidence” among consumers and this will cause a recession. Is this possible? If so, how? Use an aggregate demand-aggregate supply analysis to answer the question. Explain intuitively what is going on.
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3. Consider the following macroeconomic model of the economy operating under “slack conditions”: YE ECIG  200 (3/ 4) dis CY dis Y Y TX TR   240 (1/3) TX Y  80 TR 220 I 400 G
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This note was uploaded on 01/12/2012 for the course ECON AS.180.101 taught by Professor Maccini during the Fall '08 term at Johns Hopkins.

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econ101fall11ps3 - Name: Section: T.A. Name: 180.101...

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