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Explain why it has this impact. What is the impact on the level of real GDP demanded, assuming the price level remains unchanged?
Calculate the change in the level of real GDP demanded for each of the following values of the MPC.
Assuming that this is true, what was the spending multiplier for the Cash for Clunkers program?
Provide examples of automatic stabilizers. What is the impact of automatic stabilizers on disposable income as the economy moves through the business cycle?
What did classical economists assume about the flexibility of prices, wages, and interest rates? What disagreements did Keynes have with classical economists?
Explain how the steepness of the short-run aggregate supply curve affects the government's ability to use fiscal policy to change real GDP.
Global Economic Watch Go to the Global Economic Crisis Resource Center. Compare and contrast the economic situations in the countries.
Read the article Inflation Should Be Lesser Worry for MPC. At the time of publication, what was the output gap in South Africa?
Question 1: Can you please explain the concepts of total utility, marginal utility, and utility maximization.
How do Unemployment compare to the explanations reviewed in the chapter case study?
What is the impact of shifts of the aggregate demand curve on potential output? Illustrate your answers with a diagram.
How has the increased use of computers affected U.S. productivity in recent years? Is contribution of computers expected to increase or decrease in near future?
Rules of the Game How do rules of the game affect productivity and growth? What types of rules should a government set to encourage growth?
Explain how output per capita can grow faster than labor productivity. Is it possible for labor productivity to grow faster than output per capita?
How can each type be illustrated with a per-worker production function? What determines the slope of the per-worker production function?
However, many richer economies have little land or land of poor quality. How can a country with little land or unproductive land become rich?
Sources of Inflation Using the concepts of aggregate supply and aggregate demand, explain why inflation usually increases during wartime.
What would be the size of the U.S. labor force? If 85 million adults are not working, what is the unemployment rate?
What role do inventories play in determining real GDP demanded? Suppose initially that firms are either producing more than people plan to spend, or producing.
What equalities hold at the level of real GDP demanded? When determining real GDP demanded, what do we assume about the price level?
Real GDP Demanded In your own words, explain the logic of the income-expenditure model. What determines the amount of real GDP demanded?
What are the components of aggregate expenditure? In the model developed in this chapter, which components vary with changes in the level of real GDP?
What factors are assumed constant along the net export function? What would be the impact on net exports of a change in real disposable income?
What impact does the behavior have on the saving rate in the overall economy? What impact does this behavior have on an individual's lifetime consumption?
A number of factors can cause the consumption function to shift. What, if anything, happens to the saving function when the consumption function shifts?