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Economics homework help

Global economics
 
 
 
1) Assume that the AS curve is positively sloped. After an economic shock, we observe that the equilibrium price level is lower than before but real equilibrium output has increased. Which one of the following events, by itself, could explain this observation
 

  1. an increase in input prices
  2. an increase in factor productivity
  3. an increase in exports
  4. a reduction in investment expenditure
  5. a decrease in the tax rate

 
 
 
 
2) Under what circumstances would an expansionary demand shock result in virtually no increase in real income but a large increase in the price level
 

  1. a) if the demand shock occurred in the flat range of the AS curve
  2. b) if the demand shock occurred in the intermediate range of the As curve
  3. c) if the demand shock occurred in the steep portion of the AS curve
  4. d) If unit costs were constant before and after the demand shock
  5. e) if input prices decreased

 
 
 
 

  • The government can use fiscal policy( the power to spend or not) to shift aggregate demand. There are two ways that the government can slow down the economy. Choose one and explain how this would work.

 
 
 
 
4) If the Bank of Canada increases the money supply, we would expect the
 

  1. a) interest rate to fall, and the AD curve to shift to the left
  2. b) interest rate to fall, and the AD curve to shift to the right.
  3. c) interest rate to rise, and the AD curve to shift to the left
  4. d) interest rate to fall, and the Ad curve to become flatter
  5. e) none of the above

 
 
 
5) If Canadian interest rates rise relative to those in other countries, the
 

  1. a) demand for Canadian dollars in international exchange markets will increase
  2. b) demand for Canadian dollars in international exchange markets will fall
  3. c) exchange rate will stay the same
  4. d) Canadian dollar will appreciate
  5. e) both (a) and (d)

 
 
6) With reference to your answer to question 5, you would expect
 

  1. a) net exports to increase and the AD curve to shift to the left
  2. b) the AD curve to shift to the right
  3. c) net exports to decrease and the AD curve to shift to the left
  4. d) net exports to decrease and equilibrium levels of Y and P to increase
  5. e) none of the above

 
 
 
7) At initial equilibrium (AD=AS=Ype), an increase in the money supply shifted the AD curve to the right because
 

  1. a) an excess demand for money was created in the money market; thus interest rates and investment expenditure will both increase
  2. b) consumption expenditure decreased as real GDP decreased
  3. c) real wealth decreased
  4. d) a decline in interest rates stimulated more investment expenditures
  5. e) the exchange rate appreciated

 
 
 
 
8) for an open economy, an increase in the money supply is also likely to shift the AD curve to the right because.
 
a)lower interest rates lead to larger capital inflows and a depreciated exchange rate

  1. b) higher interest rates lead to lower net exports
  2. c) an appreciation of the domestic currency and higher net exports
  3. d) lower interest rates lead to higher capital outflows, an appreciated exchange rate, an increased net exports.
  4. e) none of the above are correct

 
 
 
 
 
9)
 
 
 
10)
Using the three graphs(money supply, investment levels and AS/AD) explain the two series of effects that an increase in nominal money supply would produce on Real GDP(Y) and the price level(P). Be sure your explanations are complete.

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