ECO 372 WEEK 5 INDIVIDUAL FINAL EXAMINATION Click Here to Buy the Tutorial http://www.uoptutorial.com/index.php?route=product/product&path=114&product _id=2138 For more course tutorials visit www.uoptutorial.com
1. Both the demand curve and the Aggregate Demand curve are downward sloping. b. Will the reasons you listed in (a) also explain the shape of the demand curve? c. What will happen to Aggregate Demand, short run Aggregate Supply and long run Aggregate Supply when the following factors change? (Considering each factor as a separate, unrelated incident) i. National income increases. ii. Crude oil price increases. iii. Labor productivity increases.
2. The nation G has no international trade and no income taxes. The marginal propensity to consume (MPC) is 0.8. a. Investment increased by $40 billion. Before price level changes, what is the change in the equilibrium expenditure? What direction will the Aggregate Demand (AD) curve shift? b. In the short run, what will happen to the price due to this movement in AD? c. Because of this change in price, will consumption expenditure be affected? Explain. d. Since the price level has changed, will the AD curve shift again? Explain. 3. When economy is not in long-run equilibrium, it is in either an inflationary gap or a recessionary gap.
a. Define the inflationary gap and the recessionary gap?
b. What is the appropriate fiscal policy that the government should adopt in the inflationary gap? What are the tools? Will this policy balance the government’s budget? c. What is the appropriate monetary policy that the Fed should adopt in the recessionary gap? What are the tools? 4. Trade barriers are often used to limit free trade between two nations. If the U.S. has imposed a higher tariff on Canada’s lumber, what would be its long-run effects in the two nations on: a. The allocation of resources b. The price level c. The standard of living.
5. Research firms and government agencies periodically announce various types of economic indicators. a. Select one economic indicator, discuss its current trend and include a graph to illustrate its trend. b. Illustrate an example on how this economic indicator has affected you in your daily life.