3 assignment econ and photo

Name: ___________________________ Class: _________________ Date: __________

Assignment 7 ECON 002

1. Answer the following questions using an aggregate demand–aggregate supply model. (5pts) a. Represent an economy at long-run equilibrium. b. Show what happens when aggregate demand increases. c. Is this economy in an expansion or recession now? d. What type of fiscal policy would you suggest be taken by Congress? e. What will this policy do to your aggregate demand–aggregate supply model?

2. Which of the following graphs illustrates what happens when the government enters the loanable funds market to borrow?

a.

b.

c.

d.

e.

3. Which of the following diagrams shows what supply-side fiscal policy initiatives try to do to the long-run aggregate supply curve?

f.

g.

h.

i.

j.

4. At ________ tax rates, ________ in those tax rates lead to ________ in total tax revenue.

k. high; increases; increases

l. low; increases; decreases

m. low; decreases; increases

n. low; decreases; decreases

o. high; decreases; decreases 5. The Federal Reserve generally uses ________ to implement monetary policy.

p. government spending

q. federal tax policy

r. the reserve requirement ratio

s. the discount rate

t. open market operations 6. Central banks can use monetary policy to

a. decrease taxes.

b. reduce interest rates.

c. increase long-run productivity.

d. increase government spending.

e. balance government budgets.