Questions from General Economics

Q: “Competition in quality and service may be just as effective as

“Competition in quality and service may be just as effective as price competition in giving buyers more for their money.” Do you agree? Why? Explain why monopolistically competitive firms frequently p...

Q: Why is the aggregate demand curve downsloping? Specify how your explanation

Why is the aggregate demand curve downsloping? Specify how your explanation differs from the explanation for the downsloping demand curve for a single product. What role does the multiplier play in sh...

Q: Distinguish between “real-balances effect” and “wealth effect

Distinguish between “real-balances effect” and “wealth effect,” as the terms are used in this chapter. How does each relate to the aggregate demand curve?

Q: What assumptions cause the immediate-short-run aggregate supply curve

What assumptions cause the immediate-short-run aggregate supply curve to be horizontal? Why is the long-run aggregate supply curve vertical? Explain the shape of the short-run aggregate supply curve....

Q: Explain how an upsloping aggregate supply curve weakens the realized multiplier effect

Explain how an upsloping aggregate supply curve weakens the realized multiplier effect from an initial change in investment spending.

Q: Why does a reduction in aggregate demand in the actual economy reduce

Why does a reduction in aggregate demand in the actual economy reduce real output, rather than the price level? Why might a full-strength multiplier apply to a decrease in aggregate demand?

Q: Explain: “Unemployment can be caused by a decrease of aggregate

Explain: “Unemployment can be caused by a decrease of aggregate demand or a decrease of aggregate supply.” In each case, specify the price-level outcomes.

Q: Which of the following scenarios will shift the investment demand curve right

Which of the following scenarios will shift the investment demand curve right? a. Business taxes increase. b. The expected return on capital increases. c. Firms have a lot of unused production capaci...

Q: Use shifts of the AD and AS curves to explain (

Use shifts of the AD and AS curves to explain (a) the U.S. experience of strong economic growth, full employment, and price stability in the late 1990s and early 2000s and (b) how a strong negative...

Q: In early 2001 investment spending sharply declined in the United States.

In early 2001 investment spending sharply declined in the United States. In the 2 months following the September 11, 2001, attacks on the United States, consumption also declined. Use AD-AS analysis t...