The factors that change (i.e., SHIFT) aggregate demand (AD) include each of the following except: O Expectations about the future. ◇ Fiscal policy and monetary policy. O Potential GDP changes. O The state of the world economy.

A neoclassical economist and a Keynesian economist are studying the economy of Vineland. It appeals that Vineland is beginning to experience a mild recession with a decrease in aggregate demand. Which of these two economists would likely advocate that the government of Vineland take active measures to reverse this decline in aggregate demand? Why?

Many financial analysts and economists eagerly await the press releases for the reports on the home price index and consumer confidence index. What would be the effects of a negative report on both of these? What about a positive report?

Legislation proposes that the government should use macroeconomic policy to achieve an unemployment rate of zero percent, by increasing aggregate demand for as much and as long as necessary to accomplish this goal. From a neoclassical perspective, how bill this policy affect output and the price level in the short nm and in the long run? Sketch an aggregate demand/aggregate supply diagram to illustrate your answer. Hint revisit Figure 26.4.

Who in an economy is the big winner from inflation?

Would you usually expect GDP as measured by what is demanded to be greater than GDP measured by what is supplied, or the reverse?