Suppose that in May the government undertakes the type of poqu that Is necessary to bring the economy back to the natural level of output given In
the previous scenario. In September 2820, consumer condence Increases, leading to an Increase In consumer sp
Suppose the government decldes to intervene to bring the econon'nur back to the natural level of output by usin Barnslona y-oliw.
Depending on which curve is afected by the government po'cy, shift either the AS curve or the AD curve to reect th
Suppose the Fed announces that it is raising its target interest rate by 3'5 basis points, or 0.?5 percentage point. To do this, the Fed will use open-
market operations to decrease 1/ the supply of if money by buying bonds from X the public.
5 Points: _
Suppose that for each one-percentage-point increase in the interest rate, the level of investment spending declines hv $0.5 billion. The change in the
interest rate (according to the change you made to the mone'lr market in the previous scenario) therefor
Which of the following probably occurred as the U.S. economy experienced increasing real GDP in 1958'? Check all that apply.
if Consumer spending increased.
it Cl The unemployment rate declined.
v' Retail sales increased.
v' [3 Industrial production decli
Lecture Notes, U.C. Berkeley: Econ 210a, for
January 21, 2009
Economic Growth: The Ultimate
J. Bradford DeLong
The Biggest Picture
Neoclassical economists like to make the heroic and not very well-
justied assumption that at t
Notice that real GDP trends upward over time but experiences ups and downs in the short run. These short-run uctuations in real GDP are otten
referred to as the business cycle 1" .
True or False: Small ups and downs in real GDP follow a consis