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

Info icon This preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
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.
Image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
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.
Image of page 2