MACROECONOMICS BU 204 SeminarSeven

Agenda Course Issues and Questions Course Issues and Questions Chapter Twelve Concepts and Q&A Chapter Twelve Concepts and Q&A Where are we going next? Where are we going next?

Government Spending to Combat a Recession

Increase in government spending Increase in the aggregate demand curve Increase in the price level and the real GDP

$6 $6.1 AS $155 $160 Real GDP E2E2 E1E1 Using Fiscal Policy to Combat Inflation E´ full employment AD 1 AD 2

Decrease in government spending or increase in taxes Decrease in the aggregate demand curve Decrease in the price level

Increase in real GDP Tax collections rise and government transfer payments fall Budget surplus offsets inflation

Decrease in real GDP Tax collections fall and government transfer payments rise Budget deficit offsets recession

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Chapter 12 Questions

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Using aggregate demand, short-run aggregate supply, and long- run aggregate supply curves, explain the process and causes by which each of the following economic events will move the economy from one long-run macroeconomic equilibrium to another. Use the diagrams below, resizing them as necessary, to illustrate your analysis. In each case, what are the short-run and long-run effects on the aggregate price level and aggregate output? a. There is a decrease in households’ wealth due to a decline in the stock market (15 points). b. The government lowers taxes, leaving households with more disposable income, with no corresponding reduction in government purchases (15 points).

Macroeconomics BU204 Homework: Homework: Question: 1. Use the Kaplan electronic library and databases to research and compose a 5-paragraph essay (APA format) to identify a minimum of 3 economic concepts and/or theories from this course and how they relate to some current event (properly cite a minimum of three electronic references). (10 points) 2. Record the methods you used to discover these sources. (10 points) 3. Which data bases did you search? What combination of search terms did you use? Which methods resulted in the most hits? Which methods resulted in few or no hits? (10 points)

Macroeconomics Questions?