Q.1 (B2. Shift of aggregate demand) For each of the following separate scenarios, discuss how it would affect AD, SRAS and LRAS. Stock prices keep rising. More tourists come to Seattle The number of workers increases. Firms expect price level to fall. Government spends more money on military Q.2 (D1. Equilibrium in the Aggregate demand-aggregate supply model) For each of the following separate scenarios, discuss what happens in short run and then long run. There is a severe drought reducing the farm yield. Consumers are more confident about the economy. There are more workers in the labor force. Due to stock market crash, the wealth of households drops The government depreciates its currency. Q.3 (D1. Equilibrium in the Aggregate demand-aggregate supply model) Suppose an event happens and the price level and real GDP change as shown in the following table:   Before the event Short run Long run Real GDP (USD) 3.5 trillion 3.8 trillion 3.5 trillion Price level 100 120 140 Discuss what happened that cause the above changes.

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Q.1 (B2. Shift of aggregate demand) For each of the following separate scenarios, discuss how it would affect AD, SRAS and LRAS.

  1. Stock prices keep rising.
  2. More tourists come to Seattle
  3. The number of workers increases.
  4. Firms expect price level to fall.
  5. Government spends more money on military

Q.2 (D1. Equilibrium in the Aggregate demand-aggregate supply model)

For each of the following separate scenarios, discuss what happens in short run and then long run.

  1. There is a severe drought reducing the farm yield.
  2. Consumers are more confident about the economy.
  3. There are more workers in the labor force.
  4. Due to stock market crash, the wealth of households drops
  5. The government depreciates its currency.

Q.3 (D1. Equilibrium in the Aggregate demand-aggregate supply model)

Suppose an event happens and the price level and real GDP change as shown in the following table:

 

Before the event

Short run

Long run

Real GDP (USD)

3.5 trillion

3.8 trillion

3.5 trillion

Price level

100

120

140

Discuss what happened that cause the above changes.

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