Principles of Macroeconomics

ECO 2302, Principles of Macroeconomics 1

Course Learning Outcomes for Unit III Upon completion of this unit, students should be able to:

3. Discuss how various national economic indicators relate to economic growth. 3.1 Explain the shapes of the aggregate demand and supply curves and how they interact to

determine real gross domestic product (GDP) and the price level for a nation. 3.2 Describe the differences between classical and Keynesian theories. 3.3 Explain the two ways of calculating GDP.

Question 1: No format required- minimum 200 words If you were in charge of regulating the way gross domestic product was calculated, would you include illegal activities in the calculation? Why, or why not? Question 2: Determine whether each of the following would cause a shift of the aggregate demand curve, a shift of the aggregate supply curve, a shift in neither curve, or a shift in both curves. If a shift is caused, indicate which curve shifts, and in which direction it shifts. What happens to aggregate output and the price level in each case? The price level changes. Consumer confidence increases. The supply of resources decreases. The wage rate decreases. There is no minimum word requirement for responses. Please label each section of your response with the appropriate number (1, 2, 3, 4). Question 3: Compare the classical economic theory that was used prior to the Great Depression to the Keynesian theory used after the Great Depression. Your response must be at least 200 words in length. Question 4: Explain how gross domestic product is calculated using each of the following: the income approach and the expenditure approach. Your response must be at least 200 words in length