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    Navigating Microeconomics Concepts

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    4) (Consumption function) How would an increase in each of the following affect the consumption function?
    a. net taxes
    b. the interest rate
    c. consumer optimism or confidence
    d the price level
    e. consumers net wealth
    f. disposable income
    9) (simple spending multiplier) For each of the following values for MPC, determine the size of the simple spending multiplier and the total change in real GDP demanded following a 10 billion dollar decrease in spending:
    a.. =.09
    b. =.075
    c. =00.6
    3) (Changes in aggregate supply) List 3 factors that can change the economy's potential output. What is the impact of shifts of the aggregate demand curve on potential output? Illustrate with a diagram.

    6) (supply shocks) Give an example of an adverse supply shock and illustrate graphically. Now do the same for beneficial supply shock.

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    Solution Summary

    This solution provides short answers related to microeconomics concepts