You will draw four separate Aggregate-Demand/Aggregate-Supply graphs.  Each graph will have one curve shift.  Be sure to label axis, curves, and equilibrium.  Change colors to show the shift and label the new equilibrium.  Draw an ADAS graph at equilibrium.  Suppose the interest rates on loans on capital goods decrease.  Which curve will shift? Draw the new equilibrium.  Draw an ADAS graph at equilibrium.  Suppose there is an decrease in government spending.  Which curve will shift? Draw the new equilibrium.  Draw an ADAS graph at equilibrium.  Suppose the income of our trading partners increase.  Which curve will shift? Draw the new equilibrium.  Draw an ADAS graph at equilibrium.  Suppose there is widespread concern that prices will continue to rise in the future.  Which curve will shift? Draw the new equilibrium.

Suppose AE = 0.50 Y + 500. If GDP = $1,000, and There will be excess supply, so inventory will accumulate and firms will reduce output next period. There will be excess demand, so inventory will shrink and firms will increase output next period. There will be neither excess demand nor excess supply, so Y = $1,000 is the equilibrium level of GDP.

If the price level increases, what happens to the consumption function? Why?

An increase in consumer spending causes the       ["", ""]  curve to shift to the       ["", ""]  .

The following graph plots an aggregate demand curve.   Using the graph, shift the aggregate demand curve to depict the impact that a tax hike has on the economy. Suppose the governments of two very similar economies, economy N and economy M, implement a tax cut of equal size. The tax cut in economy N is permanent, while the tax cut in economy M is temporary. The economies are otherwise completely identical. The tax cut will have a larger impact on aggregate demand in the economy with the (temporary tax cut/permanent tax cut)    .

3. Supply and demand for loanable funds The following graph shows the market for loanable funds in a closed economy. The upward-sloping orange line represents the supply of loanable funds, and the downward-sloping blue line represents the demand for loanable funds. Supply Demand 100 200 300 400 500 LOANABLE FUNDS (Billions of dollars) A INTEREST RATE (Percent) m 0 0 600

If the supply of petroleum were reduced by petroleum firms due to rising inventories, we can expect what?

Which of the following would increase aggregate demand?   A) Increase in taxation.   B) Increase in savings.   C) Decrease in consumption spending.   D) Increase in government spending.

Suppose we start with a general equilibrium, and the economy experience an improvement in payment technology. Which of the following statements correctly describes the goods market response in the short term?  1. The IS curve remains unchanged 2. The IS curve shifts to the left  3. The IS curve shifts to the right 4. None of the above

Consider two closed economies that are identical except for their marginal propensity to consume (MPC). Each economy is currently in equilibrium with real GDP and total expenditure equal to $100 billion, as shown by the black points on the following two graphs. Neither economy has taxes that change with income. The grey lines show the 45-degree line on each graph. The first economy's MPC is 0.5. Therefore, its initial total expenditure line has a slope of 0.5 and passes through the point (100, 100). The second economy's MPC is 0.70. Therefore, its initial total expenditure line has a slope of 0.70 and passes through the point (100, 100). Now, suppose there is an increase of $30 billion in investment in each economy.   Place a green line (triangle symbol) on each of the previous graphs to indicate the new total expenditure line for each economy. Then place a black point (plus symbol) on each graph showing the new level of equilibrium output.