1.        What are the three causes the aggregate demand curve to slope downward? Consumption, investment, and net exports.

2.        What is the difference between the causes of the shifts of the aggregate demand curve and movements along the aggregate demand curve? The causes of shift depend on fluctuations in real GDP and the price level. The movements depend on consumption, investment and net exports.

3.        Why is there a difference between LRAS curve and the SRAS curve? LRAS curve shows the relationship in the long run between the price level and the quantity of real GDP supplied. SRAS curve shows the relationship in the short run between the price level and the quantity of real GDP supplied by firms.

4.       What is the difference between the causes of the shifts of the aggregate supply curve and movements along the aggregate supply curve? It captures the relation between real production and the price level. As the price level rises, real production is greater. As the price level fails, real production also declines.

1.        Why does the multiplier effect occur?  An initial increases in autonomous expenditure sets off a series of increases in real GDP.

2.        If the MPC is 0.75 and there is an increase in autonomous expenditure of $100 billion, what will the multiplier be? 750

3.        How does the federal budget deficit impact private investment?  Without the money, the private investment cannot make purchase they want to do.

1.        Which macroeconomic schools of thought believe that there is no difference between the short run and the long run aggregate supply curve? University of Chicago and New York University.

2.        Which economic schools of thought believe that the equilibrium level of real GDP per year is completely supply determined, and, that changes in aggregate demand affect only the price level, not real GDP? Carneige Mellon University and Arizona State University

3.        Which macroeconomic schools of thought believe that prices, especially the price of labor (wages), were inflexible downward due to the existence of unions and long-term contracts between businesses and workers? Harvard University.

4.        In whose model is increase in aggregate demand (AD) only leads to increase in real GDP and not the price level? Karl Marx

5.        In whose analysis does increase in AD lead to a lower short-run equilibrium increase than when the SRAS curve is horizontal, and to a higher price level that then causes planned purchases of goods and services to decline or rise to a level less than when the SRAS curve is horizontal? Karl Max

6.        Which macroeconomic school of thought said that when price level rises partially, real GDP can be expanded beyond the level consistent with its long-run growth path? Carneige Mellon University and Arizona State University

7.        An increase in aggregate demand will not raise the price level, and a decrease in aggregate demand will not cause the firms to lower prices.

8.        Which macroeconomic schools of thought made this statements and why? Carneige Mellon and Arizona State University, they argue that fluctuations in real GDP are caused by temporary shocks to productivity.

1.        What is your prediction of what you are about to read?  I predict certain schools will have different opinions on different parts of macroeconomics.

2.        How will you remember what you are about to read? I will take notes and make notes of keywords and key names in the reading passages.

3.        What are some things you are about to do to learn this information? Take notes, read carefully.

As you read, did you put each passage in your own words? Yes, I did.