Exercises CH12 - Préparation 2/2 pour le QCM noté PDF

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Préparation 2/2 pour le QCM noté...

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Chapter 12 - Aggregate Demand and Aggregate Supply

Chapter 12 - Aggregate Demand and Aggregate Supply McConnell, Brue, and Flynn 22e PROBLEMS 1. Suppose that consumer spending initially rises by $5 billion for every 1 percent rise in household wealth and that investment spending initially rises by $20 billion for every 1 percentage point fall in the real interest rate. Also assume that the economy’s multiplier is 4. If household wealth falls by 5 percent because of declining house values, and the real interest rate falls by two percentage points, in what direction and by how much will the aggregate demand curve initially shift at each price level? In what direction and by how much will it eventually shift? LO2

2. Answer the following questions on the basis of the three sets of data for the country of North Vaudeville: LO4

a. Which set of data illustrates aggregate supply in the immediate short run in North Vaudeville? The short run? The long run? b. Assuming no change in hours of work, if real output per hour of work increases by 10 percent, what will be the new levels of real GDP in the right column of A? Does the new data reflect an increase in aggregate supply or does it indicate a decrease in aggregate supply?

3. Suppose that the aggregate demand and aggregate supply schedules for a hypothetical economy are as shown in the following table: LO5

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Chapter 12 - Aggregate Demand and Aggregate Supply

a. Use the data above to graph the aggregate demand and aggregate supply curves. What are the equilibrium price level and the equilibrium level of real output in this hypothetical economy? Is the equilibrium real output also necessarily the fullemployment real output? b. If the price level in this economy is 150, will quantity demanded equal, exceed, or fall short of quantity supplied? By what amount? If the price level is 250, will quantity demanded equal, exceed, or fall short of quantity supplied? By what amount? c. Suppose that buyers desire to purchase $200 billion of extra real output at each price level. Sketch in the new aggregate demand curve as AD1. What is the new equilibrium price level and level of real output?

4. Suppose that the table presented below shows an economy’s relationship between real output and the inputs needed to produce that output: LO4

a. What is productivity in this economy? b. What is the per-unit cost of production if the price of each input unit is $2? c. Assume that the input price increases from $2 to $3 with no accompanying change in productivity. What is the new per-unit cost of production? In what direction would the $1 increase in input price push the economy’s aggregate supply curve? What effect would this shift of aggregate supply have on the price level and the level of real output? d. Suppose that the increase in input price does not occur but, instead, that productivity increases by 100 percent. What would be the new per-unit cost of production? What effect would this change in per-unit production cost have on the 12-2 © 2021 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Chapter 12 - Aggregate Demand and Aggregate Supply

economy’s aggregate supply curve? What effect would this shift of aggregate supply have on the price level and the level of real output?

5. Refer to the data in the table that accompanies Problem 2. Suppose that the present equilibrium price level and level of real GDP are 100 and $225, and that data set B represents the relevant aggregate supply schedule for the economy. LO6 a. What must be the current amount of real output demanded at the 100-price level? b. If the amount of output demanded declined by $25 at the 100 price shown levels in B, what would be the new equilibrium real GDP? In business cycle terminology, what would economists call this change in real GDP?

12-3 © 2021 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part....