Derive the aggregate demand curve using both the expenditure
function and the MP curve (show these graphic derivations
separately). These two derivations give slightly different
representations of the AD curve. Explain the difference.
3) Aggregate supply, Aggregate Demand (Use graphs for all your
answers)
a) Derive the AD curve from the IS-LM model.
b) Discuss what affects the slope of the short-run AS and how.
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c) In the AS-AD model how does a tax cut affect the natural rate
of output, the output level, and the level of prices? (Explain both
cases of a long-run and a short-run AS curve).
d) Discuss the notion of the crowding-out of private...
1. Based on the IS-LM model, derive the
aggregate demand curve in the three sector economy. What
are the factors that cause the aggregate demand curve to be
negatively sloped?
2. Using the IS-LM curve framework, analyze the
effects of each of the following shifts on the level of income and
the interest rate.
(a) A fall in the autonomous component of investment
(b) An open market purchase of securities by the
Federal Reserve System
3. (a) Will monetary policy be more or...
In the dynamic aggregate demand and aggregate supply model, the
rate of inflation will increase if:
Select one:
A. AD shifts to the right by more than the LRAS curve.
B. If total production increases faster than total spending.
C. SRAS and LRAS curves shifts to the right by the same
magnitude.
D. AD shifts to the right by less than the LRAS curve.
What does an aggregate demand curve represent?
What are the three reasons the aggregate demand curve is
downward sloping?
What government policies can shift the aggregate demand
curve?
What does the aggregate supply curve represent?
Why is the short-run aggregate supply curve different than the
long-run aggregate supply curve?
When aggregate demand shifts to the right, what happens to
price level, output, and unemployment in the short-run? (Note that
employment is not explicitly shown on the AD/AS model but will...