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Unit 5 Practice

The document is a practice sheet for a Macroeconomics Unit focusing on graphing economic scenarios, including negative output gaps and changes in consumer spending. It includes exercises on graphing shifts in the PPC, AS/AD, and Phillips curve, as well as fill-in-the-blank questions related to economic concepts. Additionally, it addresses the impact of investment and consumer spending on economic growth and long-run aggregate supply.

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Meltem Taskin
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© © All Rights Reserved
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11 views1 page

Unit 5 Practice

The document is a practice sheet for a Macroeconomics Unit focusing on graphing economic scenarios, including negative output gaps and changes in consumer spending. It includes exercises on graphing shifts in the PPC, AS/AD, and Phillips curve, as well as fill-in-the-blank questions related to economic concepts. Additionally, it addresses the impact of investment and consumer spending on economic growth and long-run aggregate supply.

Uploaded by

Meltem Taskin
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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MACROECONOMICS UNIT 5

PRACTICE SHEET
Part 1: Graphing Practice- Draw an economy with a negative output gap using the PPC, AS/AD graph, and Phillips
curve. Label the initial equilibrium “A”.

PPC AD/AS Phillips Curve

1. Show what happens on all three graphs when there is an increase in consumer spending leading to full employment.
Label the new equilibrium point “B”.

2. Show what happens on all three graphs when more consumer spending results in a positive output gap. Label the
new equilibrium point “C”.

3. Show what happens on all three graphs in the long-run. Label the new equilibrium point “D”.

Part 2: Make Connections- Fill in the blanks using ↑ (increase), ↓ (decrease), or NC (no change).
4. ↑ Education spending → ___ human capital → ___ long-run aggregate supply → ___ growth rate.

5. ↓ Saving → ___ real interest rates → ___ investment → ___ capital stock → ___ growth rate.

6. ↑ Federal budget deficit → ___ interest rates → ___ investment → ___ capital → ___ growth rate

7. ↓ Public infrastructure → ___ productivity → ___ growth rate → ___ long-run aggregate supply.

8. ↑ Consumer spending → ___ aggregate demand → ___ long-run aggregate supply

Part 3: Economic Growth- Use an AD/AS graph to show an economy


at full-employment.
9. Show what happens on the graph in the long-run when there is an
increase in investment.

10. How would you show this increase in investment on the production
possibilities curve (PPC)?

11. How would the AD/AS graph be different if there was an increase in
consumer spending instead of an increase in investment? Explain.

©Copyright Jacob Clifford. Annual license required


Do not use unless you have purchased a license

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