AP ECONOMICS: March 20 --Discuss FRQ #5 Warm-up #1

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AP ECONOMICS: March 20 --Discuss FRQ #5 Warm-up #1 (A) Draw a graph showing the economy at long-run equilibrium. (B) Suppose that household wealth has been falling for several months. Given this, adjust your graph to show both the short run change in price level and real GDP. (C) Using your graph in (B), show how the economy will adjust in the long run without government intervention. (D) Draw a new graph showing how the economy will adjust if the government decides to intervene using fiscal policy (E) How much would the government need to change it’s spending, taxation, and transfer payments if the gap is $450B & MPC=.9? Warm-up #2 Suppose an economy has $40 million in M1 and $90 million in M2. If people move $5 million from checkable deposits to savings accounts, what is the value of M1 and M2? Why? Assignment --GC Assignment #19 (Module 26) --Study for Self-Correction Quiz (Quiz on Friday)