ECON 1BB3 : Macro notes.docx

38 views13 pages

pucedog271

1 Dec 2013

School

McMaster University

Department

Economics

Course

ECON 1BB3

Professor

Bridget O' Shaughnessy

For unlimited access to Study Guides, a Grade+ subscription is required.

adrianagreen0110 and 39672 others unlocked

ECON 1BB3 Full Course Notes

Verified Note

11 documents

Document Summary

Absolute advantage occurs when a country or region can create more of a product with the same factor inputs. Planned capital investment by private sector businesses is linked to the growth of demand for goods and services. When consumer or export demand is rising strongly, businesses may increase investment to expand their production capacity and meet the extra demand. This process is known as the accelerator effect. But the accelerator effect can work in the other direction! A slowdown in consumer demand can create excess capacity and may lead to a fall in planned investment demand. Aggregate demand curve the aggregate-demand curve shows the quantity of goods and services that households, firms, and the government want to buy at each price level. Aggregate supply (as) measures the volume of goods and services produced within the economy at a given price level.

Related Questions

Determine the effect on either the aggregate demand curve (is it a rightward or a leftward shift?), the aggregate short-term supply curve, and the long-term aggregate supply curve (does the upward sloping portions of the SAS curve shift left or right, or does the vertical portion of the LAS curve shift to the right or the left?). Also determine the effect on the price level, the real output level, and employment/unemployment. Explain and express this graphically using the AS/AD macro model.

The rapid development of internet technologies during the 1990s allowed businesses to produce goods and services cheaper than before and also gave rise to completely new services. We would show this change in the aggregate-demand/aggregate-supply model by moving the aggregate supply curve down (right) with little change in aggregate demand. Improvements in technology increase potential output and reduce costs, moving the short aggregate supply curve down and the long-run aggregate supply curve to the right.

ochreworm549

According to the interest-rate-based monetary policy transmission mechanism, an increase in the money supply generates:

a. lower interest rates, which causes an increase in planned real investment spending and an increase in aggregate demand.

b. spending on consumer goods and services directly, which causes an increase in aggregate demand.

c. an increase in nominal GDP and a change in the price level, but no change in real GDP.

d. an increase in aggregate supply since the supply of money is part of aggregate supply.

azuregerbil469

The aggregate supply curve will be vertical when:

a. the output can be increased without an increase in the price level.

b. the economy is operating at full-employment capacity.

c. output and price level rise together.

d. the aggregate demand curve is shifting to the left.

e. aggregate demand is absent.

tanfish840

ECON 1BB3 : Macro notes.docx

ECON 1BB3 Full Course Notes

Document Summary

Get access

Related Documents

ECON 1BB3 Chapter Notes - Chapter 5: Menu Cost, Exchange Rate, Aggregate Supply

ECON 1BB3 Final: Chapter 14

ECON 1BB3 Lecture Notes - Lecture 15: Fiscal Multiplier, Exchange Rate, Aggregate Demand

Related Questions