November 2019

Classical economic theory says there is a linkage between investment and savings. Explain the source of this linkage. What is the argument that says this link is not as strong as classical economists believe? Classical economic theory says there is a linkage between investment and savings. Explain the source of this linkage. What is the […]

10-2. Suppose that the long-run aggregate supply curve 10-2. Suppose that the long-run aggregate supply curve is positioned at a real GDP level of $15 trillion in base-year dollars, and the long-run equilibrium price level (in index number form) is 115. What is the full-employment level of nominal GDP? nominal GDp= real GDP*price= 1725 trillion

0-4. Suppose that the position of a nation’s long-run 10-4. Suppose that the position of a nation’s long-run aggregate supply curve has not changed, but its long-run equilibrium price level has increased. Which of the following factors might account for this event? (See page 219.) price can rise when AD rises or short run AS

10-6. Suppose that during the past 3 years, equilibrium 10-6. Suppose that during the past 3 years, equilibrium real GDP in a country rose steadily, from $450 billion to $500 billion, but even though the position of its aggregate demand curve remained unchanged, its equilibrium price level steadily declined, from 110 to 103. What could