Q1. Explain why the output level demand determined in the Simple Keynesian is Model?
Q2. Suppose that there is a raise in the autonomous investment. Under which conditions will the last effect on the level of equilibrium income be greater?
a) With a relatively high MPC.
b) A relative low MPC.
Illustrate.
Q3. Explain why does monetary policy fail to moderate the aggregate supply shock?
Q4. Explain the government expenditure multiplier?
Q5. Describe the justification of the supposition of strong excess capacity in the Simple Keynesian model.
Q6. Describe the impact of a raise in the money supply in the short run and in the long run in the AD-AS model.
Q7. Describe the effect of a favorable demand shock in the short run and in the long run in an AD-AS model. In this context describe the stabilization policy of the government.