Assignment:
Please answer the following questions. Submit as a Microsoft Word document to the Dropbox when completed.
1. Determine whether each of the following would cause a shift of the aggregate demand curve, a shift of the aggregate supply curve, neither, or both. Which curve shifts, and in which direction? What happens to aggregate output and the price level in each case?
a. The price level changes
i. Which curve shifts?
ii. Which direction does it shift?
iii. What happens to aggregate output?
iv. What happens to the price level?
b. Consumer confidence declines
i. Which curve shifts?
ii. Which direction does it shift?
iii. What happens to aggregate output?
iv. What happens to the price level?
c. The supply of resources increases
i. Which curve shifts?
ii. Which direction does it shift?
iii. What happens to aggregate output?
iv. What happens to the price level?
d. The wage rate increases
i. Which curve shifts?
ii. Which direction does it shift?
iii. What happens to aggregate output?
iv. What happens to the price level?
2. Determine whether the following statements are true or false.
i. Some people who are officially unemployed are not in the labor force.
ii. Some people in the labor force are not working.
iii. Everyone who is not unemployed is in the labor force.
iv. Some people who are not working are not unemployed.
3. Refer to the following data on the U.S. consumer price index and answer the questions below.
|
Year
|
CPI
|
Year
|
CPI
|
Year
|
CPI
|
Year
|
CPI
|
|
1988
|
118.3
|
1993
|
144.5
|
1998
|
163
|
2003
|
184
|
|
1989
|
124
|
1994
|
148.2
|
1999
|
166.6
|
2004
|
188.9
|
|
1990
|
130.7
|
1995
|
152.4
|
2000
|
172.2
|
2005
|
195.3
|
|
1991
|
136.2
|
1996
|
156.9
|
2001
|
177.1
|
2006
|
201.8
|
|
1992
|
140.3
|
1997
|
160.5
|
2002
|
179.9
|
|
|
a. Compute the inflation rate for each year 1989-2006.
b. Which years were years of inflation?
c. In which years did deflation occur?
d. In which years did disinflation occur?
e. Was there hyperinflation in any year?