Macroeconomics Quiz 5 - Aggregate Supply and demand
Professor Matthew Festa
Due in Class Tuesday Oct 23rd.
1) (2 points) - Draw the long run aggregate supply curve and explain the economic reason why it is shaped the way it is. Use the principles of Say's law in your explanation.
2) (2 points) Draw the "Keynesian" supply curve and explain why it is shaped the way it is. Explain how this differs from Say's law in the first example.
3) (2 points) Explain the three economic reasons why the aggregate demand curve slopes the way it does (draw it to illustrate your point.
4) (2 points) If the government or federal reserve stimulates the economy in such a way that the aggregate demand curve shifts right (i.e. increases), what will happen to the price and output level if we have a classical economy? Why?
5) (2 points) What will happen in a Keynesian economy? Why?