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In macroeconomics, there is extensive use of the aggregate supply

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solution


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1. In macroeconomics, there is extensive use of the aggregate supply (AS) and aggregate;demand models (AD). Suppose that President Obama decides to implement a new;stimulus bill to create new jobs because of the persistent effects of the recession. As a;remedy, he implemented tax cuts to for all income groups. What will happen to the price;level and the output (real GDP) in the short and long-run AS-AD model? Be sure to;show your graph and explain what is going on as well.;2. Given the following scenarios, explain whether or not it is included or excluded from;the calculation of GDP. If it is included into the calculation of GDP, what category of;GDP is it part of: Consumption, Investment, Government, or Net Exports. If it is not;included in GDP, just state Not Included.;a. Patsy Prune registered for a class at the University of Phoenix. She paid;$1,500 for the course.;b. Blueberry Bonnie retired from Northrup-Grumman after 30 years. She is now;receiving her pension of $3,000 a month.;c. Strawberry Shortcake bought a new Mercedes from a German car dealer. The;car will be shipped from Germany at the end of the month.;d. The White House crashers at the State Dinner: The Sahlahis decided to hire;lawyer to defend them. They spent $10,000 to their lawyer.;e. Britney Spears had a 48 hour marriage that was later annulled. She paid a;lawyer $500 to annul the marriage.;f. Tiger Woods fell from grace after his wife chased him with a golf club down;the street (he did not do well at the Masters either). As a remedy he entered;the Hattiesburg Clinic for therapy and paid $100,000 for it.;g. President Obama decided to build a new vessel which is named USS Pelosi.;He spends $250 billion dollars for this vessel.;h. Joe the Plumber, remember him? He is back. He decides to run for Congress;in Ohio. The Federal Election Commission gave $300,000 in election funds;for his election bid.;i. Suzy Q purchased the book, Going Rogue by Sarah Palin, the day it came out;from Amazon.com.;j. Sarah Palin revisited!! Her nemesis almost future son-in-law, Levi Johnston;posed for Playgirl. He was paid $500,000 for this photo shoot.;3. Suppose you have the following data;Artland;Rayland;Nominal;GDP;10,000;20,000;Year 2008;Price;Index;200;210;Nominal;GDP;11,000;24,000;Year 2009;Price;Index;210;212;Nominal;GDP;12,000;25,500;Year 2010;Price;Index;220;220;a. Calculate the real GDP for Artland for the years 2008, 2009, and 2010.;b. Calculate the real GDP for Rayland for the years 2008, 2009, and 2010.;c. Calculate the rate of growth of real GDP for Artland between the years 2009 and;2010. Do the same for Rayland.;d. What is the difference between the nominal GDP and real GDP? Why do;economists like to use real GDP? Explain.

 

Paper#27102 | Written in 18-Jul-2015

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