Why is aggregate demand curve downward sloping? (Interest-rate effect, foreign purchases effect and real-balances effect be able to explain logic behind each of these)
What are the determinants (shifters) of AD curve.
Be able to determine the equilibrium level of GDP after a change in either AS or AD.
How can cost-push inflation be shown and explained using AD-AS model?
How can demand-pull inflation be shown and explained using AD-AS model?
What is a ratchet effect?
What are the two instruments of discretionary fiscal policy?
How can the government pursue expansionary/contractionary fiscal policy?
Why the equal-size change in government expenditures or taxation have a different effect on GDP? Which one will have a larger effect?
Why progressive tax system is called a build-in stabilizer?