What is the FED’s job and how does the FED manage the money supply? How do banks create money? Let’s explore these questions as we talk about the role of the Federal Reserve Bank, also known as the
September 3, 2020
National After – tax Consumption | It G +’x Minus Aggregate Income Income* Imports Expenditures $8, 000 $4, 340 $9, 000 $10, 000 $11, 000 $12, 000
September 3, 2020


TRUE/FALSE and EXPLAIN: “GDP is equal to $1 trillion in 2010 according to the expenditure approach. If there are two stages of production (primary and then final) and primary output is equal to $400 billion, then, using the production approach to measure GDP, GDP will be equal to $600 billion.” Confine your answer to one paragraph.

Question 2:

Technical model usage (5 MARKS) You have two economies, A and B. A is experiencing rapid technological innovation between Year 1 and Year 2. B is suffering from an outflow of foreign capital during the same period. (a) Depict what is happening in A versus B using a PPF diagram. (b) Explain your answer and diagram in one paragraph.

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