Chapter Ten – Real GDP and Price Level In The Long Run

10-9 Suppose that there is a sudden rise in the price level. What will happen to economywide planned 

spending on purchases of goods and services? Why? 

10-15 Explain how, if at all, each of the following events would affect equilibrium real GDP and the 

long-run equilibrium price level. 

a.

A reduction in the quantity of money in circulation

b.

An income tax rebate (the return of previously paid taxes) from the government to households, 

which they can apply only to purchases of goods and services

c.

A technological improvement

d.

A decrease in the value of the home currency in terms of the currencies of other nations

Chapter Eleven – Classical and Keynesian Analysis

11-4 Suppose that the Keynesian short-run aggregate supply curve is applicable for a nation’s economy. 

Use appropriate diagrams to assist in answering the following questions:

a.

What are two events that can cause the nation’s real GDP to increase in the 

short run?

b.

What are two events that can cause the nation’s real GDP to increase in the long run?

11- 7 Suppose that there is a temporary, but significant, increase in oil prices in an economy with an 

upward-sloping SRAS curve. In this case, however, suppose that policymakers wish to prevent 

equilibrium real GDP from changing in response to the oil price increase. Should they increase or 

decrease the quantity of money in circulation? Why? 

Deficits and Debt

14 -1 In 2019, government spending is $4.3 trillion, and taxes collected are $3.9 trillion. What is the 

federal government deficit in that year? 

14 -8 Suppose that the share of U.S. GDP going to domestic consumption remains constant. Initially, the 

federal government was operating with a balanced budget, but this year it has increased its spending well 

above its collections of taxes and other sources of revenues. To fund its deficit spending, the government 

has issued bonds. So far, very few foreign residents have shown any interest in purchasing the bonds.

a.

What must happen to induce foreign residents to buy the bonds?

b.

If foreign residents desire to purchase the bonds, what is the most important source of 

dollars to buy them?

and got other question on picture…