Posted: November 9th, 2015

ECONOMICS

ECONOMICS

Section A- Discussion Questions (30

According to a local politician,there is no need for government intervention when positive externalities are present because no one is being harmed. Comment about this opinion from an economic point of perspective. Include any relevant diagram in your answer.

In the aggregate demand/aggregate supply framework, what factors will cause aggregate demand to shift and what are the implications for macroeconomic equilibrium? Include any relevant diagram in your answer.

Section B – Short Answer

Questions

Explain the difference and potential interaction between the multiplier and the accelerator. Include any relevant diagram in your answer.

Should gift cards be considered as part of money supply? Explain your reasons based on the features of money.
Section C

Exercise

Suppose you are given the following information about the economy, with the values in billions of dollars:

Total sales

value of production by firms

$150,000

Total expenditure on intermediate products by

firms

$130,000

Consumption

$10 000

Investment

$5,000

Net exports

$-500

What is the GDP in this case?

What is the government expenditure?

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