Sras Curve

Sras Curve

  • Submitted By: haganp
  • Date Submitted: 10/17/2008 4:05 AM
  • Category: History Other
  • Words: 285
  • Page: 2
  • Views: 368

1. Label each of the following quarters as expansion, contraction, peak or trough based on GDP growth figures (percent change from the previous quarter):
a. 2007 Q1: 0.1
b. 2007 Q2: 4.8
c. 2007 Q3: 4.8
d. 2007 Q4: -0.2
e. 2008 Q1: 0.9
f. 2008 Q2: 2.8

2. For each of the following situations, explain whether AD will increase, decrease or stay the same, ceteris paribus.
a. Personal disposable income in the United States increases by 4%
b. Personal income taxes are increased 5% in all brackets
c. Government spending increases by 3% this fiscal year
d. 30-year fixed mortgage rates decrease by 2%
e. Consumer confidence is on the rise
f. The dollar depreciates relative to the Euro

3. For each of the following, explain which of the four components of GDP will be affected and whether GDP will increase or decrease, ceteris paribus. More than one component may be affected and the cumulative effect on GDP may be unknown for this reason.
a. Personal income tax rates decrease by 2% across the board
b. A drop in the federal funds rate causes prime interest rates to fall by 0.5%
c. The dollar appreciates relative to the yen
d. Congress approves a $140 billion tax rebate plan For each of the following, explain whether only SRAS or both SRAS/LRAS will be affected and if it (they) will increase or decrease.
a. Price of oil rises 9%
b. Corporate income taxes rise 5%
c. Widespread increases in technology that affect all industries
d. Price of lumber falls 4%
e. Productivity falls among American manufacturers
f. Congress tightens lending regulations on financial markets and credit institutions

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