Consider a negative short-run aggregate supply shock hitting the
economy using the Aggregate supply/aggregate demand (AS/AD)
model.
Give two examples of such a shock and carefully explain itsshort
-run effects and the underlying reasoning (do NOT provide a
diagram).
Assuming policymakers ignore this shock, explain step by step
what happens in the economy in the longer-term (do NOT provide a
diagram).
How should the central bank and/or the government respond to
this shock? Carefully explain (do NOT provide a diagram)....
Consider a negative short-run aggregate supply shock hitting the
economy using the Aggregate supply/aggregate demand (AS/AD)
model.
a. Give two examples of such a shock and carefully explain its
short-run effects and the underlying reasoning (do NOT provide a
diagram).
b. Assuming policymakers ignore this shock, explain step by step
what happens in the economy in the longer-term (do NOT provide a
diagram).
c. How should the central bank and/or the government respond to
this shock? Carefully explain (do NOT...
Define for each scenario whether AD (Aggregate Demand) or AS
(Aggregate Supply) will shift, and indicate if it will be an
outward shift (rightward) or inward shift (leftward).
a. A fall in the price of oil
b. A rise in consumer optimism
c. A hurricane destroys factories in South Carolina
d. Foreigners watch fewer U.S.-made movies
e. New inventions occur at a faster pace
f. A faster money growth
Define for each scenario whether AD (Aggregate Demand) or AS
(Aggregate Supply) will shift, and indicate if it will be an
outward shift (rightward) or inward shift (leftward).
A fall in the price of oil
A rise in consumer optimism
A hurricane destroys factories in South Carolina
Foreigners watch fewer U.S.-made movies
New inventions occur at a faster pace
A faster money growth
Explain why Coronavirus and the ensuing recession is a demand
shock rather than a supply shock. Use current inflation and
unemployment data to make your case.
Explain fully the difference between a negative demand shock and
a negative supply shock. Why is a negative supply shock worse for
an economy compared with a negative demand shock? What policies are
appropriate in dealing with a negative demand shock? What policies
are appropriate in dealing with a negative supply shock?
1. Are the effects of an increase in aggregate demand
in the aggregate demand and aggregate supply model consistent with
the Phillips curve? Explain
2. Explain the connection between the vertical long-run
aggregate supply curve and the vertical long-run Phillips curve
3. In the long run what primarily determines the natural rate of
unemployment? In the long run what primarily determines the
inflation rate? How does this relate to the classical
dichotomy?
Macroeconomics question: Discuss how the aggregate
supply/aggregate demand model is different from the basic
supply/demand model. be specific in terms of which factors cause
each curve (S,D,AD,SRAS) to shift for each model
Using aggregate demand, short-run aggregate supply, and
long-run aggregate supply curves, explain the process by which each
of the following government policies will move the economy from one
long-run macroeconomic equilibrium to another. Illustrate with
diagrams. In each case, what are the short-run and long-run effects
on the aggregate price level and aggregate output?
There is an increase in taxes on households.
There is an increase in the quantity of money.
There is an increase in government spending.