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ECON-1012-B-Introduction to Macroeconomics

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Short Description: A set of four graph of price level versus real G D P. Long Description: The vertical axis of each graph is labelled, price level and the horizontal axis is labelled, real G D P. The graph are as follows.(a) The line for S A S slopes upward from the lower left corner to the upper right corner. The line for A D slopes downward from the upper left corner to the lower right corner, intersecting the lines for S A S. The line for L A S is a vertical line from a point on the horizontal axis. The line intersect the lines for S A S and A D right to their point of intersection.(b) The line for S A S slopes upward from the lower left corner to the upper right corner. The line for A D slopes downward from the upper left corner to the lower right corner, intersecting the lines for S A S. The line for L A S is a vertical line from a point on the horizontal axis. The line intersect the lines for S A S and A D at their point of intersection. (c) The line for S A S slopes upward from the lower left corner to the upper right corner. The line for A D slopes downward from the upper left corner to the lower right corner, intersecting the lines for S A S. The line for L A S is a vertical line from a point on the horizontal axis. The line intersect the lines for S A S and A D left to their point of intersection.(d) The line for S A S slopes upward from the lower left corner to the upper right corner. The line for A D slopes downward from the upper left corner to the lower right corner, intersecting the lines for S A S. The line for L A S is a vertical line from a point on the horizontal axis. The line intersect the lines for S A S and A D left to their point of intersection.

Figure 10.3.3

Refer to Figure 10.3.3, which shows the AS-AD model in which an economy is in four possible short-run macroeconomic equilibrium. In which of the graphs would we predict that eventually the price level will rise and real GDP will fall, everything else remaining the same?
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When is an economy always at short-run macroeconomic equilibrium?
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If the Bank of Canada wants to eliminate high inflation, which of the following policies would be appropriate to use?
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If the Bank of Canada buys government securities in the open market, which of the following events occur?

Bank reserves ________ and the overnight rate ________.
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What is the short-run effect of the Bank cutting the overnight rate target?
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In what state of the economy does the Bank of Canada set a high overnight rate target?
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Short Description: A line graph of price level versus real G D P. Long Description: The vertical axis is labelled, price level (G D P deflator) and ranges from 100 to 140 in increments of 10 with a kink near the bottom. The horizontal axis is labelled, real G D P (billions of 20 12 dollars) and ranges from 0 to 500 in increments of. The line for S A S slopes upward passing through the point (200, 130). The line for A D slopes downward passing through the point (200, 130) intersecting the line for S A S at this point. The line for L A S is a vertical line from 250 on the horizontal line intersecting the line for A D and S A S right to their point of intersection.

Figure 14.3.2

Refer to Figure 14.3.2, which shows an economy in which potential GDP is $250 billion. To return the economy to full employment, which of the following actions does the central bank take?

The central bank ________ the overnight rate target and ________ government securities.
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To decrease aggregate demand, which of the following actions would the Bank of Canada take?
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When the Bank of Canada conducts an open market purchase of government securities, which of the following events occurs?
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When the Bank of Canada uses the corridor system, how does the Bank lower the overnight rate?
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