ECON102 Lecture Notes - Hadad

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byzantiumgrasshopper344

16 Oct 2011

School

University of Waterloo

Department

Economics

Course

ECON102

Professor

Angela Trimarchi

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Document Summary

* (percent change in real gdp 4%) Exercise: calculate the change in cyclical unemployment when real gdp grows at an average rate of 3%. Used to explain short-run fluctuations in the economic activity around its long-run trend. Shows the relationship between the aggregate price level and the total quantity of aggregate output demanded by households, businesses, and the government. Graphs output (y) and the price level (p) Recall the basic equation of national income accounting: Gdp = c + i + g + x im. Aggregate demand curve slopes downward for reasons other than individual demand curve: Ad curve is drawn holding all other variables constant i. e. the money supply and fxr. This increases exports of canadian goods and decreases. An decrease in the canadian price level (holding the foreign exchange rate constant) makes canadian goods cheaper than foreign goods imports of foreign goods at a lower canadian price level rises.

Related Questions

Q17. The term "recession" refers to a
a. period of decline in real GDP over two consecutive quarters
b. fall in the general level of real wages over two consecutive quarters
c. fall in the CPI over two consecutive quarters
d. fall in the rate of increase of real per capita GDP

Q18. Cost changes generally lag behind price changes during the business cycle.
a. true
b. false

Q19. Measuring the intensity of the business cycle requires
a. adding seasonal variations to cyclical fluctuations
b. adding seasonal variations and random fluctuations to cyclical changes
c. eliminating seasonal variations and identifiable random forces from the data
d. multiplying the trend by the cyclical fluctuations

Q20. During the contraction phase of the business cycle,
a. prices fall relative to costs, reducing profit margins
b. costs fall relative to prices, reducing profit margins
c. prices fall relative to costs, increasing profit margins
d. costs fall relative to prices, increasing profit margins

Q21. The aggregate supply curve is
a. a curve showing the quantities of total output that business will purchase for investment at various price levels
b. a curve showing the quantities of total output that will be offered for sale at various price levels
c. a curve showing the quantities of goods and services that households will provide at various price levels
d. one point on the aggregate expenditure curve

Q22. The aggregate demand curve is the sum of individual demand curves in the economy.
a. true
b. false

Q23. The classical economic doctrine held that the normal equilibrium position of the economy was one of
a. rising interest rates
b. some unemployment
c. rising prices
d. full employment

whiteswan988

In the Keynesian model

aggregate demand determines real GDP per year.

the short-run aggregate supply curve determines real GDP.

unemployment cannot persist for long periods of time.

the aggregate demand curve determines the price level.

A terrible winter storm causes enormous problems in the

northeastern

part of the United States. This would cause

the short-run aggregate supply curve to shift to the left, but would have no effect on the long-run aggregate supply curve.

both the short-run and the long-run aggregate supply curves to shift to the left, but the long-run aggregate supply curve would shift more than the short-run curve.

the short-run aggregate supply curve to shift to the left, and the long-run aggregate supply curve would shift to the right.

both the short-run and the long-run aggregate supply curves to shift to the right in equal amounts.

Equilibrium real GDP rises after the dollar strengthened. From this we can conclude that

the increase in aggregate demand was greater than the decrease in aggregate supply.

the decrease in aggregate demand was more than the increase in aggregate supply.

the decrease in aggregate demand was less than the increase in aggregate supply.

the increase in aggregate demand was less than the decrease in aggregate supply.

Saving is

the difference between real GDP and disposable income while savings is the difference between disposable income and consumption spending.

the amount one does not consume in a given period of time while savings is the accumulation of past periods of saving.

the difference between disposable income and spending on goods and serviceswhile savings is the difference between real GDP and disposable income.

the accumulation of past periods of savings while savings is the amount of disposable income that is not consumed in a given period of time.

A permanent reduction in investment spending leads to

a proportional decrease in real GDP.

a more than proportional decrease in real GDP.

a more than proportional increase in real GDP.

a less than proportional decrease in real GDP.

An increase in net exports leads to an increase in real GDP. Further,

consumption spending increases while investment spending decreases.

consumption spending increases but saving does not change.

consumption spending and saving increase.

government spending decreases to offset the increase in net exports.

An increase in aggregate spending that is caused by a factor other than the price level will lead to the

aggregate demand curve shifting to the right.

aggregate supply curve shifting to the right.

aggregate supply curve shifting to the left.

aggregate demand curve shifting to the left.

The marginal propensity to consume is 0.9. The multiplier is

0.9.

1.11.

0.1.

10.

When the SRAS curve slopes upward, the actual affect of an increase in real autonomous spending on equilibrium real GDP is smaller than predicted by the multiplier because

real GDP increases.

the price level rises

the price level falls.

real GDP decreases.

Other things equal, the lower the total real value of final goods and services demanded in the economy the

more the production possibilities cure shifts to the left.

lower the price level.

higher the price level.

lower the level of endowments.

The long-run aggregate supply curve can be thought of as the

level of output for which real GDP equals nominal GDP.

level of output that the nation is currently producing.

level of real GDP associated with a constant price level.

full-employment level of real GDP.