Aggregate Demand

outcome62

DescriptionSection 1 – Aggregate Demand
Create a graph for an aggregate demand curve in the short-run. Use the variable ‘Price Level’ for the vertical axis and ‘Real GDP’ for the horizontal axis.
In essay form, explain why there is an inverse relationship between the price level and real GDP. Explain how this graph is related to the income-expenditure model.
Use your graph to illustrate your explanations. (150 to 400 words)
Reference and cite your course textbook. The graph can be hand or computer generated.
Section 2 – Aggregate Supply
Create a graph for a short-run aggregate supply curve. Use the variable ‘Price Level’ for the vertical axis and ‘Real GDP’ for the horizontal axis.
In essay form, explain why there is a direct relationship between the price level and real GDP. Use your graph to illustrate your explanation. (150 to 400 words)
Reference and cite your course textbook. The graph can be hand or computer generated.
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Section 3 – Fiscal Policy Solution
Create a graph with an aggregate demand curve and an aggregate supply curve in the short-run. Use the variable ‘Price Level’ for the vertical axis and ‘Real GDP’ for
the horizontal axis. Indicate the equilibrium level of output and the price level.
In essay form, describe a fiscal policy scenario that could result in a reduction of unemployment. Show the new equilibrium level of output and price level as a result
of this policy in your graph. Explain how the implementation of this policy is related to the simple spending multiplier. Explain how the fiscal policy could solve the
problem of unemployment. Use your graph to illustrate your explanation. (150 to 400 words)
Reference and cite your course textbook. The graph can be hand or computer generated.
Section 4 – Monetary Policy Solution
Create a graph with an aggregate demand curve and an aggregate supply curve in the short-run. Use the variable ‘Price Level’ for the vertical axis and ‘Real GDP’ for
the horizontal axis. Indicate the equilibrium level of output and the price level.
In essay form, describe a monetary policy scenario that could result in reversing inflation. Show the new equilibrium level of output and price level as a result of
this policy in your graph. Explain how the implementation of this policy creates the new equilibrium level of output and the price level. Explain how the monetary
policy could solve the problem of inflationary pressures. Use your graph to illustrate your explanation. (150 to 400 words)
Reference and cite your course textbook. The graph can be hand or computer generated.
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Section 5 – News Article on Fiscal and/or Monetary Policy
Locate an online news story related to either fiscal or monetary policy.
In essay form, write a summary of the article and discuss the most interesting knowledge you learned from the article in relation to the course textbook. (150 to 400
words)
Reference and cite your course textbook and the news article.
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