[S] Fundamentals of Macroeconomics
[S] Fundamentals of Macroeconomics EconS 102
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This 8 page Class Notes was uploaded by Maurine Kuhic on Thursday September 17, 2015. The Class Notes belongs to EconS 102 at Washington State University taught by Staff in Fall. Since its upload, it has received 19 views. For similar materials see /class/205986/econs-102-washington-state-university in Economic Sciences at Washington State University.
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Date Created: 09/17/15
Use the following to answer quesaonl The Mnlu39plier Fignr Planned aggregale spending Aseianm a Change in Income l Expendnure Equilibrium GDP Emma E almem Real sop billions vl dollars Aggregate V price level Real GDP 1 Figure The Multiplier Ifthls economy is currently at Y andthe pnee level decreases men A pnee level B AD vnll shlftto the right re ecting amultlplledlncrease m the real GDP at every ee level pnee level D pnee level Pagel 2 An rnerease m goyemment spendlng on health eare ls llkely to shlft the A shortrrun aggregate supply eurye to the nght B shortrrun aggregate supply eurye to the let C aggregate demand eurye to the rrght D aggregate demand eurye to the let 3 Ralslngtaxesshlft th regate A agg deuryet l B longrrun aggregate supply eurye to the let C aggregate demandeuryeto errgt D shortrrun aggregate supply eurye to the let Use the followlng to answer quesuon 4 Figure Shirt unhe Aggregate Demand Curve Pnce level Real GDP 4 Flgure Shrlt othe Aggregate Demand Curye Amovementfrom pornt c on Apato porntd on ADl may have been the result of A an rnerease m rnyestment demand due to optrmrstre GDP forecasts B a deerease m rnyestment due to pessrmrstre GDP forecasts C deereases m the taxes paldby buslnesses D lower rnterest rates 5 An rner ase m aggregate demand wlll generate m real GDP and m the m e rtrun e pnee leyel th sho D no ehange an rnerease PageZ 6 An rn auonary gap wlll be elrrnrnated beeause tlnere ls pressure on wages eausrn tlne downward longrmn aggregate supply eurye to slultto tlne nglnt downward longrmn aggregate supply eurye to slultto tlne lelt downward aggregate dernand eurye to slultto tlne lelt upward shonrmn aggregate supply eurye to slultto tlne lelt 9953 Use tlne followmg to answer quesuon 7 Figur shirtsnmneADeAs Curves Panel lal Panel lul Prlue level Prlue level sans SPAS P2 7 Fl 39 P e H ADI Pa 7 ADl ADl m V v vr v Real GDP Real GDP 1 Panel ls Panel a Pnce level Pnce level was ERAS F gt sans P SRASl l e 1 P1 7 Fquot AD Aul y V2 Vl V2 Real GDP Real GDP Flgure Shle oftheADAS curves In tlne short run an lncrease m net exports ls rllustrated by A Panel a B Panel b C Panel e D Panel d Page Use tlne followmg to answer quesnon 9 Figure shifts at the ADeAS Curves tlne aggregate demand eurve slnlts to tlne nglnt e we slnlt amdvement up tlne aggregate demand eurve ovement down tlne aggregate demand eurve s to the left Panel lal Panel lnl Price level Price level sRAsv sRAsv P1 7 F p AD P2 7 An z wt AD y v2 v v Real GDP Real cup panel 4 Panel la Pnce level Prlce level was was P gt ERAS P snAst t e I P2 e p1 Apt Ant v v y Va Real em Real GDP 9 gure snllts oftheADAS erves In tlne shonrun an merease m wages ls lllustxated b A Panel a B Panel b C Panel e D Panel d PageA eause me pnee level to and potentlal output to A lncreaselncrease B deerease deer C lncrease remam stable D deerease remam stable Use the followmg to answer quesaor ll Figur Innau39nnary and Recessinnary Gaps Panel a Panel lol PnceIvol LRAS SEAS PHcoIeveI m s SPAS p 1 P 1 Pl P 39 AD l l Y1YP p Y Real GDP Real GDP 11 Flgure y InPanela L ADlndJEates A an economy expenenclng esslonary gap aree B enenclng arrrrr aaorrary gap C Lhatthe economy ls m longrmn equlllbnum D Lhatthe economy has an unusually low unemployment rate PageS Use the following to answer question 12 Figur ADeAsMndelu Aggregm price men LRAS SRAS1 P1 7 7 E1 A01 RaaIGDF w meme11 umpul 12 Fxgure ADrASModel H Ifcommoduy pncesmcreasewh1ch ome following Wm take place7 A SRAScurve W111 5111110 Lhele B 11151111110 me nght D AD curve Wm 5111110 me nght 13 As an m auonary gap 15 ehmmated through selfrcorrectmg adjustment the eqmnbnum u pnee level an the eqmnbnum real outp mcrease e reases B mcreases e 535 D decreases mcreas Page Answer Key 1 D 2 C 3 A 4 B 5 A 6 D 7 A 8 B 9 D 10 C 11 A 12 A 13 A Page 7