Briefly explain what an aggregate demand curve is comprised of. Describe the shape of the demand curve and briefly explain the three reasons behind this shape.

2. Identify the most important factor shifting the AS curve in the long term. Briefly explain both how and why this factor shifts the aggregate supply curve.
4. Briefly discuss the effects of time lags in relation to fiscal policy. Describe 4 different lags mentioned in the book. How can that influence the effectiveness on fiscal policy during recession.
6. Identify and briefly describe at least four practical difficulties of discretionary fiscal policy.
8. In this Short Answer Assignment, you were asked to research, identify, and briefly describe the problems that arise from measuring price levels with a fixed basket of goods and what steps can be taken to counter these problems. In 2000 the Bureau of Labor Statistics introduced a new measurement to try to correct the measurement limitations. This measurement is not included in most 2000 level Macro courses. Since inflation is measured differently than described in the textbook, it is important for to know the difference.

The assignment is to complete the following:

2. What is the name of the new measurement?
4. How is it different than the basket method described in the book?
6. How often is the measurement changed?
8. What method is used to address the problems identified in the first assignment?
10. How do the measurement results compare to the basket CPI method?

Answer rating: 100% (QA)

Answer Aggregate Demand Curve The aggregate demand AD curve represents the total quantity of goods and services demanded in an economy at different price levels It is comprised of four components Cons... View the full answer