What is supply? What is demand?
Develop a model of a market, utilizing supply and demand. What are the dominant variables or parameters?
What is a shortage? What is a surplus? DEMONSTRATE (use model)
Via the model, explain the dynamic changes that can happen in a market. Give examples.
Relate the Micro economic model of supply and demand to the Macro-economic modal of Aggregate Demand and Aggregate Supply.
3. Essay Questions. Please answer all parts of each question.
What is Aggregate Demand?
Develop a model showing the importance and effects of Aggregate Demand on the overall economy.
What is Fiscal Policy?
What are the goals of Fiscal Policy?
What are the tools of Fiscal Policy?
Explain the how expansionary Fiscal Policy would be implemented.
What is the presumed result of the use of Fiscal Policy?
What are the criticisms regarding the use of Fiscal Policy?
Supply and demand
Supply is a fundamental economic concept that describes the total amount of a specific good or service that is available to consumers. Demand is an economic principle that describes consumer willingness to pay a price for a good or service. Economists use the term demand to refer to the amount of some good or service consumers are willing and able to purchase at each price. Demand is based on needs and wants – a consumer may be able to differentiate between a need and a want, but from an economist`s perspective they are the same thing. When economists talk about supply, they mean the amount of some good or service a producer is willing to supply at each price. A rise in price almost always leads to an increase in the quantity supplied of that good or service, while a fall in price will decrease the quantity supplied.