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How does a decrease in foreign price levels affect domestic aggregate expenditures and demand? Draw a diagram to illustrate your answer.
Why does the aggregate demand curve slope down? Give real-world examples of the three effects that explain the slope of the curve.
Explain what a current account deficit (negative net exports) means in terms of domestic spending, production, and borrowing.
If the U.S. dollar appreciated against the euro, what would you expect to happen to U.S. net exports with Germany?
Why has nominal GDP increased faster than real GDP in United States over time? What would it mean if an economy had real GDP increasing faster than nominal GDP?
What is the GDP for this economy? What is the GNP for this economy? What is the NNP for this economy? What is the national income for this economy?
Why are there so many sole proprietorships? Why is the revenue of the average sole proprietorship less than that of the typical corporation?
Explain why total expenditures and national output may rise after the quota is imposed. Who is likely to benefit from the quota? Who will be hurt?
If households want to save and thus do not use all of their income for consumption, what will happen to total spending?
People sometimes argue that imports should be limited by government policy. Explain why total expenditures and national output may
What are the net exports of countries A, B, and C? Which country is running a trade deficit? A trade surplus?
Which hotel room is cheaper to a U.S. tourist? What is the exchange rate between the euro and the British pound?
How is the aggregate supply curve different from the supply curve for a single good, like pizza? Describe determinants and give an example of a change in each.
Draw a graph showing equilibrium in the money market. Carefully label all curves and axes and explain why the curves have the slopes they do.
Use aggregate demand and supply analysis to explain how high oil prices could reduce real GDP.
Draw and label an aggregate supply diagram that illustrates the effect of the change in each determinant.
Now draw a long-run aggregate supply curve that intersects a short-run AS curve. What is the relationship between short-run AS and long-run AS?
Draw and carefully label an aggregate demand and supply diagram with initial equilibrium at P0 and Y0. How is the short run different from the long run?
How can the short-run aggregate supply curve ever lie to the right of the long-run aggregate supply curve?
Using an aggregate demand and aggregate supply diagram, illustrate and explain how increase in real GDP could occur.
In what ways are government deficits harmful to the economy. Define and give three examples of automatic stabilizers.
Why will real GDP tend to rise when government spending and taxes rise by the same amount?
Why do government budget deficits grow during recessions? Define each and briefly offer an argument for why income taxes are usually progressive.
Describe the four functions of money using the U.S. dollar to provide an example of how dollars serve each function