The following graph shows. an increaae in aggregate demand [AD] in a hypothetical country. Specically, aggregate demand Shifts. to the right
from AD] to ADE, cauaing the quantity of output demanded to rice at all price Ieyela. For example, at a price leve
3". Use oi discretionary policy to stabilize the economy
Should the government use monetary and scal policy in an effort to stabilize the economy? The following questions address the issue of how
monetary and scal policies affect the economy. and the pros
2. Explaining short-run economic uctuations
Most economists believe that real economic variables and nominal economic variables behave independently:r of each other in the long run.
For example, an increase in the money:r supplv, a nominal v variable, wil
Attempts: 3 Keep the Highest: 2 .l 2
3. Using policyr to stabilize the economyr
The government has the ability to influence the level of output in the short run using monetary and fiscai policy. There is some disagreement as
to whether the government shou
3. Prot maximization using total cost and total revenue curves
Suppose Eric runs a smaii business that manufactures shirts. Assume that the market for shirts is a competitive market, and the market price is
$20 per shirt.
The foliowing graph shows Eric's
1. Characteristics of competitive markets
The model of competitive markets relies on these three core assumptions:
1. There must be many buyers and sellersa few players can't dominate the market.
2. Firms must produce an identical productbuyers must regar
The felewmg graph slmws the dailyr market for man cartmard boxes. in Denver.
PRICE [Dollars per small box)
D 1 2 3 4 5 '.-' B 9 H
QUANETY cfw_Miliione Drama: boxes]: Suppose that FaEero is one of more than a hundred compe
1 out of 1 points
Which two countries buy the most U.S. exports?
Canada and Mexico
Canada and Mexico
0 out of 1 points
Floridas nice beaches and subtropical climate give the state _ in
Simmee mat H'lE market for these ShittE is a compeve market. The feew'mg graph shows the [1331! met (levee of a rm eperang in this
Hint: Aef plating the rectangle on le graph, you can did: me endpi'tts to See me mettiatee of malt Quilt.
5. The Phillips curve in the late 20th centuryr
The following table shows selected data on unemployment and ination in the United States between 1911 and 191's.
Unemployment Rate Ination Rate
Year (Percent) cfw_Percent
193'4 5.5 11.0
1935 3.5 9.1
In the vear 2020, aggregate demand and aggregate ouppl'g:r in the ctional countr'g:r of Ba rtak are repre5ented bv the curves. 102.32.) and AS on
the following graph. The price level ie 102. The graph aleo Shows. two poeeible outcomes. for 2021. The r5t p
In the year 2520, aggregate demand and aggregate Supply in the ctional country of Manan are repre5entecl by the curves: ADZDZD and AS on
the following graph.
Suppoee the natural level of output in this economy i5 $5 trillion.
[in re followlng graph, use o
The follewing graphs. :1th the StEtE of an ECDTIDITW that is. CUITETIf in longrun equilibrium. The r5t graph ahewa the aggregate demand cfw_AD
and lungmn aggregate aul:.~|:+t'gur [LRASl curvea. The SECDDEI ShDWS the tongrun and Shortrun Phillipa curves. [
'lhe following graph shows an economy:r in longrun equilibrium at point A [grEf star symbol). The 1vertical line is. the longrun Phillips:
'lhe ElDW nwardslooing curve labeled SR P131 is the Shortrun Phillips curve passing through point A.
2. Optimal proolelon of public good: A: Aa E
The graphs below show the willlngness to popr wwes for Jack and Watson, two oah fishermen who depend on
Ilghthouseo for olreotions at night. Assume that they are the onhir two people in the eoonomy.
The following graph Shows. the current 5hort-mn Phillipe cunre for a hypothetical economy; the point on the graph ShDWS the iniljal
unemployment rate and ination rate. A55ume that the economy is. currently in longrun equilibrium.
Suppoae the central bank
me following graph depicts. the Shortrun ancl longrun Phillips curves [SRPC ancl LRPC] for a hypothetical economy:r in longmn macroeconomic
equilibrium at point A, where the natural unemployment rate is. 5% and the current ination rate is. 8% per year.
1. Private goods, public goods. and In between ha Aa n.5-
If a good Is nonexclusive, that means:
of El It is not possible to prevent an Individual from using the good
0 Those who are unwilling or unable to pay for the good do not obtain Its benets
Consider a hypothetical econom'g:r in which households spend $0.5D of each additional dollar theyr earn and SEVE the remaining $0.5D. 111e
following graph shows the economy's initial aggregate demand cunre [A01].
Suppose the government increases its purch
3. Using policyr to stabilize the economy
The government has the ability to influence the level of output in the short run using monetaryr and scal policy. There is some disagreement as
to whether the government should attempt to stabilize the economy.
Consider a hvp otheticai eco no my in which househotds spend $E].5[ of each additionai doiiar they:r earn and save the remaining $0.32]. The
fotiowing graph shows the economy's initiai aggregate demand curve [ADI].
Suppose the government increases its pur
4. The multiplier eect ot a change in government purchases
Consider a hypothetical closed economy in which households spend $0.?0 of each additional dollar they earn and save the remaining $0.30.
The marginal propensity to consume [MPC] for this economy i
3. Changes in the money supply
111E following graph represents. the money market in a hypothetical economy. A5 in the United Statea, this. economy has. a central bank called the
Fed, but unlike in the United Statea, the economy is. clo5ed [mat i5, the eco
111e following graph ShDWS the aggregate demand curve.
Shift the aggregate demand curve on re graph to Show the impact of a tamr hike.
I'hu r Mai-er Current Mater
121: Aggregate Deman d
cfw_III 10' 2+2 3421' 4D 50
3. Changes in the money supply
The following graph represents the money market in a hypothetical economy. As in the United States, this economy has a central bank cailed the
Fed, but unlike in the United States, the economy is closed [that is, the economy
I11e following graph Shows. the money market in a hypothetical economy. The central bank in this. economy it. callecl the Fed. Aaaume that the Fecl
xes. the quantity of money Supplied.
Suppoae the price level clecrea5e5 from SID to T5.
Shllt the appropria
Attempts: 2. Keep the Highest: 2 .f 2
1. The opportunity oost of holding assets as money
Suppose you've just inherited $10,000 from a reiatiye. You're trying to decide whether to put the $10,000 in a noninterestbearing account so
that you can use it whene
1 out of 1 points
Buy 1 British
Buy 1 Euro
1l:l. understanding how shin-Icing decreases team output no hit EL
Madeline sells bottled water from a small stand by the beach. On the last day of summer yacation.r there are many
people on the tileachIr and Madeline realizes that she can make a lot more
5. The simple money multiplier A; A3 23.
Suppose that the Federal Reserve ("the Fed") buys $15,555 of U5. government bonds anti the regulrecl reserve ratlo
ls 5.15. If the assumptions of the simple money multlpller hold, this will increase if the mone