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Econ 330 FINAL EXAM

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Question;Evaluate whether each of the following statements is true or;false. Explain your answer and provide supporting rationale.;a. The;short-run aggregate supply (SAS) curve slopes upward because households spend;more as their incomes increase.;b. The long-run;aggregate supply curve can never shift.;c. Either a;decrease in the nominal money supply by the Federal Reserve, all else held;constant, or an increase in the price level, all else held constant, will shift;the aggregate demand (AD) curve to the left.;d. The;Keynesian portion of the short-run aggregate supply (SAS) curve would be;relevant during a recessionary situation.;e. Stagflation;occurs when the aggregate demand (AD) curve shifts out on the upward sloping;portion of the short-run aggregate supply (SAS) curve.;Part 2. Evaluate whether each of the following statements is;true or false. Explain your answer and provide supporting rationale, using;graphs to support your answer. You can create graphs by hand and take pictures;and upload them with your answers, or you may use Word or Excel, and upload the;file created by these software packages.;a. If the real;money demand is greater than the real money supply, interest rates must rise to;reach equilibrium in the money market as institutions sell bonds to obtain more;money.;b. The federal;government?s control of the money supply, which influences interest rates, is;the primary tool that policy makers use to impact the macro economy.;c. A decrease;in the reserve requirement decreases the money supply because banks have fewer;reserves.;d. The real;money demand curve shows how households and businesses change their spending in;response to changes in the interest rate.;e. Both an;increase in the nominal money supply by the Federal Reserve and an increase in;the price level will cause the real money supply curve to shift to the right.

 

Paper#56491 | Written in 18-Jul-2015

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