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Exam 12: Aggregate Demand and Aggregate Supply

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Question 21

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Suppose an economic advisor to the Prime Minister recommended a personal income tax increase.Indicate the expected effects on aggregate demand and on short-run aggregate supply.

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An increase in personal income taxes wou...

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Question 22

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Differentiate between "demand-pull" and "cost-push" inflation using the aggregate demand-aggregate supply (short-run)model.

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Demand-pull inflation occurs when an inc...

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Question 23

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Is the downward price inflexibility applicable to today's economy? Why or why not?

What is the difference in the explanation of the shape of the aggregate demand curve and a single product demand curve? After all,both demand curves show an inverse relationship between price and quantity.

How can the aggregate demand curve be derived from the aggregate expenditures model?

The determinants of aggregate demand "determine" the location of the aggregate demand curve.Explain the four basic determinants of aggregate demand.

Explain the relationship between the aggregate expenditures model in graph (A)below and the aggregate demand model in graph (B)below.In other words,explain how points 1,2,and 3 are related to points 1',2',and 3'.

How can an economy already at full-employment expand without igniting inflation? Explain.

In the table below are aggregate demand and aggregate supply schedules.

Explain the three reasons given for the downward slope of the aggregate demand curve.

Using the aggregate demand-aggregate supply (short-run)model,explain how the depreciation of the Canadian dollar in terms of foreign currencies would affect the economy.

Identify the ways in which each of the following determinants would have to change to cause a decrease in aggregate demand: consumer wealth,consumer expectations,business taxes,national income in countries abroad,exchange rates.

How is the short-run aggregate supply curve sloped and why is it sloped this way?

Using the aggregate demand-aggregate supply (short-run)model,explain how a reduction in business taxes would affect the economy.