1.Suppose you have $500 in savings when the price level index is at 100.
(a) If inflation pushes the price level up by 10 percent, what will be the real value of your savings?
(b) What is the real value of your savings if the price level declines by 10 percent?

2. According to the News on page 159,
(a) By what percent did GDP decline?
(b) How much output was lost in the $14 trillion economy?
(c) How much income did this represent for each of the 300 million U.S. citizens?
(d) What was the largest GDP decline in a postwar U.S. recession?
Economy Shrank Last Quarter
WASHINGTON-Signaling what could be the start of a prolonged recession, the government said Thursday that the U.S. economy shrank in the July-September quarter as consumers slashed spending and businesses pulled back.
The Commerce Department said gross domestic product, the broadest measure of goods and services produced in the USA, fell at a 0.3% annual rate in the third quarter. Consumer spending, two-thirds of economic activity, plummeted at a 3.1% rate-the steepest fall since 1980. The overall decline was the worst since the 2001 recession.

3. If the AS curve shifts to the right, what happens ("increases" or "decreases") to
(a) The equilibrium rate of output?
(b) The equilibrium price level?