Question

rough Ideas of the questions and graphs please

1. Contrast the ideas of nominal and real GDP. Why is one more reliable than the other for comparing changes in the standard of living over a series of years? Use the concept of real and nominal GDP to compare the years 1980 and 2017. Which year was a better year for the economy and why? 2. What are the 4 phases of the business cycle? How long does a business cycle last? What causes each phase? 3. How does the size of the multiplier relate to the size of the marginal propensity to consume? Does this relationship have any relationship to economic policy? 4. Draw the aggregate demand and aggregate supply graphs in a three-panel model: In the first graph, show aggregate demand on the graph and aggregate supply in the immediate short run. In the second graph, again show aggregate demand, but this time show aggregate supply in the short run. Finally, in the last panel, show aggregate demand and aggregate supply in the long-run. Be sure to label each axis and each curve in each graph. Discuss the following by referring to your graphs: 1) What are the determinants of aggregate demand and aggregate supply? 2) Why do the aggregate demand, aggregate supply (immediate short run), aggregate supply (short run), and aggregate supply (long-run) curves slope the way they do? Finally answer the question: What is the overall point that the graph model explains. The graphs for this section may be hand-drawn and submitted as a separate attachment. It is important that you reference the graphs in your paper though. The paper should convey that you understand them:

Answer 1

Nominal GDP :- Gross Domestic Product in which the money value of goods and services calculated on the basis of current price is called in nominal GDP. In order to calculate nominal GDP, the price prevailing in the year in which the GDP under consideration is taking into account. So GDP at current prices is called nominal GDP.

Real GDP :- Gross Domestic Product in which the money value of goods and services calculated on the basis of constant prices is called real GDP. Here the value of goods and service is determined on the basis of base year price.

Real GDP is more relevant

◆ It can be used to compare year by year gdp considering inflation.

◆ Help to find the position of economy in business cycle

◆ Indicator of standard of living is GDP per capita and real GDP is good to find the per capita because it is adjusted to inflation.