PART I: SHORT RESPONSE

Directions: Please provide detailed and elaborate responses to the following questions. Your responses should be a minimum of 1 to 2 paragraphs and should include examples from the reading assignments or personal experience, if possible.

1. The classical economists believed that our economy was always at full employment or tending toward full employment. If our economy were operating below full employment, what would happen, according to the classicals, to move the economy back toward full employment?

2. When the price level increases, the quantity of goods and services purchased declines. Why does this happen?

3. Explain the difference between the long-run aggregate supply curve and the short-run aggregate supply curve.

4. What were the major areas of disagreement between John Maynard Keynes and the classical economists?

5. Describe the chain reaction that is set off when (a) aggregate demand exceeds aggregate supply; (b) aggregate supply exceeds aggregate demand.

6. If you lived in a village cut off from the rest of the world, show how Say's law would apply to your village's economy.

7. Describe the differences between an inflationary gap and a recessionary gap.

8. Explain why large deficits are so bad.

9. To what degree is the public debt a burden to future generations?

10. Suppose income taxes and unemployment compensation were cut by an equal amount. How would aggregate demand be affected?

11. As late as 1992, we were running budget deficits of nearly $300 billion. How do you explain the decline in the deficits through the rest of the decade of the 1990s?

12. Explain the crowding-in and crowding-out effects. How valid are these two concepts?

13. If you had a job as a financial counselor and a bad recession hit, what advice would you give your clients to enable them to keep their heads above water?

14. Using the AD/AS diagram possibilities, explain which diagram explains the scenarios and why that is the diagram that fits the scenario best:

· U.S. Federal Reserve allows money supply to fall during 1930s

· Federal spending increased during World War II

· Investment tax credits of 1960s

· Oil price increases of 1970s

15. Using the Keynesian aggregate expenditure model, sketch the diagram corresponding to the following historical events and explain their importance:

· Tax increases of 1990s

· Vietnam War spending of 1960s-1970s

· Tax cuts of 2000s

PART II: JOURNAL ACTIVITY

Journal Activity #1: Current Event

Directions: Select a current event that pertains to the current learning in the classroom. The current event can come from any reliable resource including the local television news, CNN, MSN, New York Times, newspapers, Excelsior library, etc.

When completing this assignment, you will want to include the following:

1. Brief reaction to the article/work (article should relate to the current course learning)

2. Explain why you feel this article pertains to class

3. Summary of the article/work: Summarize the importance of the topic vs. our class learning

4. Bibliographical entry - Follow APA format for both the current event and case study

Work will be double spaced, two-three pages in length and follow the format listed below:

Summary: A brief description of the premise of the article.

Background: What was the basis for the article? What caused the author to write the article?

Findings: What were the results/findings the article made?

Reaction to the article: What did you think?

The current event assignment must be typed, double-spaced, with 1-inch margins and 12-point type following APA format. A title page and reference page are mandatory.

Note: You may utilize LIRN to help you locate an article. Please visit the Academic Resource Center for guidelines on using LIRN and APA format.

Journal Activity #2: Macroeconomics Opinion Project

Directions: Some say the government over spends. Others feel the government must become more financially savvy. Consider the development of the United States economy and the challenges the government has faced over the past decade (bailouts, fiscal cliff, etc.). Do you agree with the theory that the government must make changes in order to survive? In a 5-page minimum APA formatted paper, evaluate your thoughts on what the role the government plays financially.

You will be expected to include real-world examples to back up your analysis. You may include topics such as the Great Depression, World Wars, and various decades to give merit to your response.

There is not a right or wrong answer to this assignment as you are describing which theory you agree with. Just be sure to thoroughly back up your topic with the use of solid examples. Wikipedia will not be counted as a valid reference for this paper.

Your paper must follow APA format with a title and reference page (not included in the page count) double-spaced and indented paragraphs, and proper in-text citations.

Note: You may utilize LIRN to help you locate resources. Please visit the Academic Resource Center for guidelines on using LIRN and APA format.