# How do the aggregate demand/supply curves differ from market curves?

How do the aggregate demand/supply curves differ from market curves?.

## Aggregate demand/supply curves

1.(Aggregate demand and supply) How do the aggregate demand/supply curves differ from market curves?

2. (suppy-side economics) On supply-side measure introduced by the Reagan administration was a cut in income tax rates. Use an aggregate demand/supply diagram to show what effect was intended. What might happen if such a tax cut also shifted the aggregate demand curve?

3. (income approach to GDP) How does the income approach to measuring GDP differ from the expenditure approach? Explain the meaning of value added and its importance in the income approach. Consider the following data the selling price at each stage of production for a 5lb. bag of flour. Calculate the final market value of the flour.

Stage of production                                       sale price

Farmer                                                              \$ 0.30

Miller                                                                  0.50

Wholesaler                                                          1.00

Grocer                                                                 1.50

4. (Expenditure approach to GDP) Given hypothetical info answer a-d

Billions of dollars

Personal consumption expenditures                            \$200

Personal taxes                                                                 50

Exports                                                                           30

Depreciation                                                                  10

Gov. purchases                                                               50

Gross private domestic investment                               40

Imports                                                                          40

Gov. transfer payments                                                 20

a. What is the value of GDP?

b. Value of net domestic product?

c. Value of net investment?

d. Value of net exports?

5.(consumer price index) calculate a new consumer price index for the exhibit. Assume that current-year prices of twinkies, fuel oil, and cable tv are .95/package, 1.25/ gallon, and 15.00/month. Calculate the current year’s cost of the market basket and the value of the current year’s price index. What is this year’s % change in the price level compared to the base year?

Twinkies      365 packages        .89/package           324.85                 .79              288.35

Fuel oil         500 gallons           1.00/gallon            500.00               1.50             750.00

Cable tv         12 months            30.00/month          360.00              30.00           360.00

\$1,184.85                                                      \$1, 398.35

6. What was the value of the consumer price index in the base year? Calculate inflation in 2013 for following a. CPI equals 200 in 2012 and 240 2013. b.150 and 175 c. 325 and 340 d. 325 and 315

How do the aggregate demand/supply curves differ from market curves? 