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Aggregate Demand and Aggregate Supply
ECO 372
Aggregate Demand (AD) and Aggregate Supply (AS)
1.
Describe a specific event that could have caused the shift shown in the graph above.
2.
When aggregate demand (AD) increases or shifts to the right, the equilibrium price
level ____________________, equilibrium output ____________________, and
increases/decreases
increases/decreases
the rate of unemployment ____________________, assuming aggregate supply
increases/decreases
is upward sloping, as shown in the graph for question 1.
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1
Money
ECO 372
Money and Banking
1.
List the functions of money.
2.
List the components of M1 and M2. Which is larger?
3.
What is the value of the money multiplier if the required reserve ratio is 20
percent?
4.
What is the difference between the discount rate and the federal funds rate?
Copyright © 2017 by University of Phoenix. All rights reserved.
1
Unemployment
ECO 372
Unemployment
1.
Define discouraged workers. What happens to the Labor Force Participation Rate when
there are more discouraged workers? Are there likely to be more discouraged workers
when the economy is booming or when the economy is in recession?
2.
Even when the economy is strong, there will be some people who are temporarily
unemployed because they are engaged in job search activities. What does this imply
about the economy’s natural or full-employment rate of unemployment? Be specific.
3.
Use the hypothetical data in the table below to calculate the Labor Force and the rate of
unemployment in each year.
Unemployed
Employed
Year 1
9.6 million
150.4 million
Year 2
12.4 million
142.6 million
Year 1
Labor Force =
unemployment rate =
Year 2
Labor Force =
unemployment rate =
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