Problems

If GDP $=C+$I and if $GDP=C+S,$

then $=($LO $11-1)$

Given the information in Figure $1,$ and assuming

an interest rate of $15$ percent: $($a$)$ Will the economy

beat equilibrium? $($b$)$ Will savings equal investment?

$($c$)$ What will happen, according to the classical

economists? $($LO $11-3,11-6)$

FIGURE $1$

Given the information in Figure $2$: $($a$)$ If aggregate

demand shifts from $A{D}_1$ to $A{D}_2,$ what happens to the

level of prices and to output? $($b$)$ If aggregate demand

shifts from $A{D}_2$ to $A{D}_3,$ what happens to the level of

prices and to output? $($c$)$ If aggregate demand shifts

from $A{D}_3$ to $A{D}_4,$ what happens to the level of prices

and to output? $($LO $11-4)$

FIGURE $2$

Given the information in Figure $2$: $($a$)$ Which

aggregate demand curve represents our economy

during the Great Depression? $($b$)$ Which aggregate

demand curve represents our economy during nearly

all the years since World War II$?($c$)$ Which aggregate

demand curve represents our economy during

a period of full employment with a great deal of

inflation? $($LO $11-6)$