ECON MACRO
5th Edition
ISBN: 9781337000529
Author: William A. McEachern
Publisher: Cengage Learning
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Question
Chapter 7, Problem 3.8P
To determine
Wartime inflation using aggregate
Introduction:
Aggregate demand is the total consumption (spending) of (on) the goods and services in the economy.
Aggregate supply is the total quantity of the goods and services produced in the economy.
Inflation refers to the percentage increase in the prices of the goods and services in the economy over the period of time.
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Draw the IS-LM diagram at equilibrium and use it to show how one or both of the curves change based on the following exogenous changes.
An increase in taxes.
An increase in the money supply
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Gross Domestic Product (GDP) represents the total value of all goods and services produced by a country. The news reporter shows excitement because rising GDP signifies positive economic performance. Consumer spending has increased while businesses expand and new job opportunities become available. If the GDP rises, your delivery business will likely handle more packages as consumer purchasing increases. The increase in business activity will lead to more opportunities for your company to generate higher profits. You may need to take action by hiring additional staff and purchasing extra delivery vehicles or finding ways to improve your operation speed and efficiency to meet increased demand.
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