AD

Question 1

How to calculate multiplier effect

Answer 1

1/1-MPC = 1/ MPW

Question 2

Effects of change in AD

Answer 2

• need sufficient space capacity in economy for Keynesian
• elastic, the more elastic the larger change in AD

Question 3

Actual vs potential growth

Answer 3

Actual is % change in HDP
Potential is change in POF or LRAS over time

Question 4

Boom characteristic

Answer 4

High national income
Positive output gap
Inflation pressures

Question 5

Recession characteristics

Answer 5

Negative output gap
Inflationary pressure
GDP falls
2 successive quarters of negative growth

Question 6

Influences of consumer spending

Answer 6

Interest rates
Confidence
Exchange rates
Trends
Wealth effect
Distribution of income

Question 7

Demand side policy

Answer 7

Monetary And Fiscal

Quantitive easing
Bank buys assets for money increases supply of money when demand low and increases asset prices. Prevents liquid of trap.
But can cause hyper inflation and rise in share prices might cause inequality can become depends eg . Eurozone