PROBLEMS AND APPLICATIONS

PROBLEMS AND APPLICATIONS 1. Suppose that the economy IS in a long-run equilibrium. a. Draw a diagram to illustrate the state of the economy. Be sure to show aggregate demand, short run aggregate supply, and long run aggregate supply. b. Now suppose that a...

QUESTIONS FOR REVIEW

QUESTIONS FOR REVIEW 1. Name two macroeconomic variables that decline when the economy goes into a recession. Name one macroeconomic variable that rises during a recession. 2. Draw a diagram with aggregate demand, short-run aggregate supply, and long-run aggregate...

CONCLUSION

CONCLUSION This chapter has achieved two goals. First, we have discussed some of the important facts about short-run fluctuations in economic activity. Second, we: have introduced a basic model to explain those fluctuations, called the model of aggregate demand and...

CASE STUDY

CASE STUDY OIL AND THE ECONOMY Some of the largest economic fluctuations in the US. economy since 1970 have originated in the oil fields of the Middle East. Crude oil is a key input into the production of many goods and services, and much of the world’s oil...