ECN 204 Lecture : Chapter 14.docx

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turquoisewildebeest476

26 Mar 2012

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Real gdp grows 2% per year on average. Recessions: periods of falling real incomes and rising unemployment. Facts about economic fluctuations: economic fluctuations are irregular and unpredictable, most macroeconomic quantities fluctuate together, as output falls, unemployment rises. Model of aggregate demand and aggregate supply: used to study fluctuations, differs from classical economic theories economists use to explain the long run. Aggregate demand curve: shows the quantity of g&s that households, firms and gov t want to buy at each price level. Aggregate supply curve: shows the quantity of g&s that firms choose to produce and sell at each price level. Ad curve shows the quantity of all g&s demanded in the economy at any given price level. Y = c + i + g + nx. We must determine how a change in p affects c, i and nx. The wealth effect (p and c, negative relationship)

Related Questions

Long-run macroeconomic equilibrium occurs when:

a. aggregate demand equals short-run aggregate supply.

b. aggregate demand equals short-run aggregate supply and they intersect at a point on the long-run supply curve.

c. unemployment equals zero.

d. output is above potential GDP.

ivorymallard37

Long-run macroeconomic equilibrium occurs when:

A. aggregate demand equals short-run aggregate supply.

B. aggregate demand equals short-run aggregate supply, and they intersect at a point on the long-run supply curve.

C. unemployment equals zero.

D. output is above potential GDP.

crimsonhornet860

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

ECN 204 Lecture : Chapter 14.docx

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