06 May WHEN THE FEDERAL GOVERNMENT OFFERED THE “CASH FOR CLUNKERS” CAR PROGRAM, HOW DID THIS AFFECT THE AD AND AS?
Below is a link to the concepts of aggregate demand (AD) and aggregate supply (AD). Use this information to answer parts A thru D on AD and AS (additional links to this area are in the bibliography section of the syllabus):
http://economics.about.com/od/aggregatedemandsupply/ss/aggregate.htm
A. Describe the AD, AS equilibrium point.
B. Assume the federal government reduces its budget deficit by reducing spending, assume nothing else changes, what affect what affect would that have on the AD?
C. American consumers currently have a high, on average, level of credit card debt If consumers decided to reduce their spending on products and services and, instead, used that money to reduce their debt, what affect would this have on AD and AS?
D. When the federal government offered the “cash for clunkers” car program, how did this affect the AD and AS?
Case assignment expectations:
Use information from the modular background readings as well as any good quality resource you can find. Make sure you cite all resources you use and provide a reference list at the end of your paper.
LENGTH: 4 typed and double-spaced pages.
In addition to the overall quality, depth, grammar, and organization of the paper, the following will, in particular, be assessed:
1. Analytical skills that allow you to draw conclusions, questions 3,4 and 5 on federal budget projections.
2. Critical thinking skills, question 5, on formulating policy about budgetary matters
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