Unit 2

Question 1

The Investment Function: What relationship does it describe?

Answer 1

Question 2

The Investment Function (Algebriac)

Answer 2

Question 3

Graph of the investment function

Answer 3

Question 4

The net exports function, (X - IM)

Answer 4

Question 5

X Function (Alg.)

Answer 5

Question 6

X Function (Graph)

Answer 6

Question 7

IM Function (Alg.)

Answer 7

Question 8

IM Function (Graph)

Answer 8

Question 9

NE Function (Alg. and Graph)

Answer 9

Question 10

IS and LM Curves (Assum.)

Answer 10

Question 11

IS and LM Curves (Eq. 1-3)

Answer 11

Question 12

IS and LM Curves (eq. 4-6)

Answer 12

Question 13

IS Curve (Conc. and Graph)

Answer 13

Question 14

What causes shifts in the IS curve?

Answer 14

Autonomous components and gov’t spending.

Question 15

IS Curve (Algebraic Derivation)

Answer 15

Question 16

IS Curve (Slope)

Answer 16

Question 17

What effects do different size values have on the IS Curve

Answer 17

Question 18

A Rise in R (IS Curve)

Answer 18

Question 19

A Rise in R (IS Curve Graph)

Answer 19

Question 20

A Decline in G (IS Curve: Alg./Conc.)

Answer 20

Question 21

A Decline in G (IS Curve: Graph)

Answer 21

Question 22

LM Curve (Conc.)

Why is it upward sloping?

Answer 22

Question 23

LM Curve (Graph)

Answer 23

Question 24

LM Curve (Alg.)

What values imply a flat LM curve?

Answer 24

Question 25

IS/LM Curve (Money Supply Inc.)

Answer 25

Question 26

LM/IS Curve Policy Analysis (Price Inc.)

Answer 26

Question 27

LM/IS Curve Policy (G Inc.)

Answer 27

Question 28

Aggregate Demand Curve (Conc.)

Answer 28

Question 29

Aggregate Demand Curve (Graph: Movement along curve)

Answer 29

Question 30

AD Curve (Graph: Shift)

Answer 30

Question 31

5 Shocks to the IS Curve

Answer 31

1. a
2. e
3. G
4. g_X
5. g_IM (inv.)

Question 32

2 Shocks to the LM Curve

Answer 32

1. P
2. Ms

Question 33

Differences between the economy in the short-run and long run.
3 of each

Answer 33

Question 34

A Decline in AD’s effect on the Okun’s Law Graph

Answer 34

Question 35

First determinant of Inflation

Answer 35

Question 36

Expected Inflation

Answer 36

Question 37

Phillips Curve (Conc.)

Answer 37

Question 38

Phillips Curve (Alg.)

Answer 38

Question 39

Phillips Curve (Graph and Shifts)

What does an upward shift look like?

When and how does a tradeoff exist?

Answer 39

Question 40

The Gradual Process of Price Adjustment

Answer 40

Question 41

Graph of Price Adjustment

Answer 41

Question 42

Increase in Gov’t Spending (Conc.)

Answer 42

Question 43

Inc. in Gov’t Spending (Graph)

Answer 43

Question 44

Causes of a Shift in AD

Answer 44

Question 45

Effects of a Shift in AD (Conc.)

Answer 45

Question 46

Effects of a Shift in AD (Graph)

Answer 46

Question 47

Potential sources of a price shock

Answer 47

Question 48

Shocks to the Price Level (Conc.)

Answer 48

Question 49

Shocks to the Price Level (Graph)

Answer 49

Question 50

Stabilization Policy (Conc.)

Answer 50

To counter shocks to the AD curve, policymakers often implement offsetting monetary or fiscal policy.

Question 51

Graph of stabilization policy to counteract a decline in AD

Answer 51

Question 52

Active Monetary Policy

Answer 52

Question 53

Active Fiscal Policy:

1. Who can enact what fiscal policy to inc. AD back to potential.
2. If __ increases the result is___
3. If ___ decreases the results is ___

Answer 53

Question 54

Problems with stabilization policy

Answer 54

Question 55

All four lags that prevent the economy from immediately adjusting.

Answer 55

Question 56

Accommodative monetary policy (in response to a rise in P) (Conc.)

Answer 56

Question 57

Nonaccommodative monetary policy (in response to a rise in P)

Answer 57

Question 58

Summary of accommodative and nonaccommodative monetary policy (in response to a rise in P)

Answer 58

Question 59

Consequences Implied by Phillips Curve when pi^e = pi^-1

Answer 59

Question 60

Possible Disinflation paths (2)

Answer 60