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TOOLS AND METHODS OF ECONOMICS QUESTIONS

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1. Which four types of spending are represented by the AD curve?;(Think in terms of GDP = ____ + _____ + _____ + _____);2. Define ?the aggregate supply curve.? (Think in terms of the total quantity of goods and services);3. Define ?cost-push inflation.?;4. Define ?demand-pull inflation.?;5. Define ?easy monetary policy.?;GRAPHICAL PROBLEMS;6. Supply and Demand Analysis.;a) Illustrate the market for a good by drawing the industry?s demand and supply curves. On the graph, identify the equilibrium price and the equilibrium quantity. Be sure to label all axes and curves.;b). If the market price is less than the equilibrium price, what is the relationship of quantity supplied to quantity demanded? What will happen to the price?;c) If the market price is greater than the equilibrium price, what will be created in the market, and what will happen to the price?;d). Define ?equilibrium price.? When will it occur in a given market?;7. Aggregate Supply and Aggregate Demand.;a) Draw the aggregate demand-aggregate supply model of the macroeconomy for the short run, assuming that the economy is in the expansionary phase of the business cycle. Label the aggregate demand and aggregate supply curves. Label the axes appropriately.;b) Identify and describe changes in the AS-AD graph above that would result from demand-pull inflation.;c) Identify and describe changes in the AS-AD graph above, which would result from cost-push inflation.;d) Identify and describe changes in the AS-AD graph above, which would result from the implementation of contractionary fiscal policy.;e) Identify and describe changes in AS-AD graph above, which would result from the implementation of an easy monetary policy.;CRITICAL THINKING;8. State the final impact of cost-push inflation on the price-level and real output.;9. State the final impact of demand-pull inflation on the price-level and real output.;10. Define ?contractionary fiscal policy,? including the means by which it is achieved.;11 What is the final impact of contractionary fiscal policy on the price-level and real output?;12. Define ?expansionary fiscal policy,? including the means by which it is achieved.;13. What is the final impact of expansionary fiscal policy on the price-level and real output?;14. Identify the three Federal Reserve tools used to undertake an easy monetary policy.;15. What are the impacts of an easy monetary policy on the price-level and real output? When would an easy monetary policy be appropriate?;16. Identify the three Federal Reserve tools used to undertake a tight monetary policy.;17. What are the impacts of a tight monetary policy on the price-level and real output? When would a tight monetary policy be appropriate?

 

Paper#21486 | Written in 18-Jul-2015

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