Macroeconomics, 9/e

Campbell R. McConnell, University of Nebraska, Lincoln
Stanley L. Brue, Pacific Lutheran University
Thomas P. Barbiero, Ryerson University

Aggregate Demand and Aggregate Supply

Internet Application Questions


1		Go to: http://www.economics.about.com/library/weekly/aa073101.htm and http://www.economics.about.com/library/weekly/aa100201.htm . Answer the following questions: The first article was written before the terrorist attacks on September 11. What factor(s) affecting aggregate demand did John Irons blame on the weakness of the economy at that time? Before the terrorist attacks, Irons claimed that consumer spending was holding up well. Have the attacks changed this situation? Explain. Give evidence from the second article. Draw an aggregate demand (AD)/aggregate supply (AS) diagram to illustrate the effects of the terrorist attacks on the U.S. economy, according to John Irons. Your diagram should show the short-run effects on AD, equilibrium price and real GDP, and the relationship between full employment and real GDP.

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