ECON 214 InQuizitive Assignment 7 solutions complete answers

ECON 214 InQuizitive Assignment 7 solutions complete answers 

 

Compared to other recessions post–World War II, what did the Great Recession have?

 

Drag each label to the appropriate curve to build the aggregate expenditure model below.

 

True or false: this economy is well described by classical economics.

 

Assume that Y0 is the full employment level of the economy. Match each scenario to the corresponding level of output.

 

Fill in the blanks to complete the passage about real GDP before and after the Great Recession.

 

The figure below depicts U.S. real GDP (the red line) and the long-run trend in GDP that prevailed before the Great Recession (the dotted blue line). After the Great Recession, there does not appear to be any tendency for real GDP to return to the long-run trend line. This situation is most consistent with a – in aggregate –.

 

Put the following dates and events in chronological order beginning with the earliest.

 

Along with the aggregate demand–aggregate supply model, there is another model that economists use to analyze people’s overall spending patterns.

 

The aggregate – model is essentially another way of viewing a country’s aggregate –. In this model, the economy is viewed from a – economist’s perspective, and it assumes that in the –, prices are –.

 

Fill in the following passage concerning the Great Depression.

 

The Great Depression is generally regarded as beginning with the – crash of October 29, –. Including that day, stock prices fell by almost – over the next few years. The Great Depression ended in –.

 

The graph below depicts the FHFA House Purchase Price Index for U.S. houses, a useful statistic for analyzing housing price changes over time. Click on the segment of the graph that corresponds to the start of the Great Recession.

 

The image below plots the log of U.S. real GDP growth over the course of more than a century. Click on the region of the graph that depicts the Great Depression.

 

Refer to the figure below and fill in the blanks to complete the following passage.

 

Economists use the –, which is graphed above, as a measure of consumers’ confidence in their financial future. One cause of the Great Recession was a fall in aggregate demand, and one cause of this decline in aggregate demand was – in expected income. Looking at the graph, one can see that the index began falling in 2007 and fell – during the recession. In 2012, the index – pre-recession levels.

 

Complete the following passage regarding the Great Depression.

 

The Great Depression challenged the prevailing – economic belief that the macroeconomy – returns to long-run equilibrium following a – shock, since it wasn’t until – after the Depression began that real GDP returned to pre-Depression levels.

 

The items below describe the events leading up to and including the Great Recession. Put these events in order of causation, so that each event causes the event that follows.

 

Match each statement with the correct portion of the aggregate demand–aggregate supply model that would be affected by it.

 

The new financial regulations imposed under the Dodd-Frank Act in 2010 represented a permanent decline in short-run aggregate supply but not in long-run aggregate supply.

 

Refer to the figure below. Which economist would believe that the macroeconomy will notquickly reach point B after a shift in aggregate demand from AD1 to AD2?

 

A major financial crisis was one cause of the Great Recession; the primary regulatory response to this financial crisis was the –.

 

In 2009 dollars, U.S. GDP was $1057 billion at the start of the Great Depression but fell to $778 billion by 1933. What percentage decline does this represent?

 

In 1928 and 1929, the federal government’s tightening of the money supply was one of the policies that contributed to the Great Depression.

 

Suppose that a new Federal Reserve administration inspires greater public confidence in a stable inflation rate, and citizens begin to expect lower prices five years in the future. As a result, prices and nominal wages fall in the present and remain low, while GDP and real wages fall for a few months but then return to normal.

 

Match each statement with the portion of the aggregate demand–aggregate supply model that would be affected by it.

 

Match each term with the phrase that best describes it.

 

The aggregate supply and aggregate demand model is a useful tool for analyzing recessions. The graph below is a model of the Great Recession. Correctly label the long-run aggregate supply (LRAS) and aggregate demand (AD) curves below to complete this model.

 

Assume that a country is currently producing at a level of output equal to $600 billion. The government decides to increase expenditures by $25 billion, and the nation’s MPC is 0.8. Based on the spending multiplier, what is the nation’s new level of total output (in billions of dollars)?

 

What are the similarities and the differences between the Great Recession and the Great Depression?

 

Which of the following are true according to the Keynesian economic view?

 

The graph below plots the unemployment rate over time from the start of the Great Recession. Click on the unemployment rate range that contains the maximum unemployment rate reached during the Great Depression of the 1930s.

 

Which of the following statements regarding the Great Recession are correct?

 

Which of the following statements regarding the Great Depression are true?

 

Which of the graphs below best represents the classical economist’s view of the macroeconomy during a typical recession?

 

Marnie earns $25,000 a year while working at a local bookstore. Because the bookstore did very well this past year, Marnie received a $500 raise. She consumes part of this additional income and saves part of it. If Marnie’s MPC = 0.75, how much money from her raise will she save?