Relationship Between Aggregate Demand And GDP

Relationship Between Aggregate Demand And GDP

Description/Paper Instructions

Relationship Between Aggregate Demand And GDP

Economic Terms Discussion

Give definition of these terms and provide examples.

Monetary base

Business Cycle

Demand deposits

Producer price index

Velocity

Bank reserves

Gross domestic income

Treasury securities(bonds)

Liability

price deflator

Macroeconomics Questions

Definitions. (Define 10 terms.

Investment

Monetary base

Consumer Price Index

Business Cycle

Demand deposits

Time Deposits

Assets

Producer price index

Velocity

Price deflator

Bank reserves

Gross domestic income

Treasury securities

Liability

Equity

1. Essay Questions

Q1:

1. a) What is GDP? Provide at least 2 interpretations of the concept GDP
2. b) Explain the relationship between Aggregate Demand and GDP.

c)Develop a mathematical model explaining GDP, and describe the impact of each its components.

d)What is the Keynesian theory of the macro economy? Use the AD/AS model to explain.

1. e) What is the Fiscal policy? What are the goals of Fiscal Policy? What are the tools of Fiscal Policy?
2. f) Explain how contractionary fiscal policy would be implemented. What are the difficulties in implementing this?
3. g) How effective do you believe fiscal policy to be?

Q2:

1. a) What is money? What, today, comprises money?
2. b) What is monetary theory? Explain the Equation of Exchange. What is the role of money in the macro economy?

c)What is the Federal Reserve? What are its important functions?

d)What is monetary policy? why are banks the means (mechanism) by? Which monetary policy must work?

1. e) What are the goals of monetary policy?
2. f) What are the tools of monetary policy? explain each
3. g) What is the target variable?
4. h) Give an example of expansionary monetary policy, showing the role of the Fed, banks, and any other economic entity.