Instructions

Prepare short written responses for the following five (5) questions. Answers for each question must not exceed 250 words.

Question 1
Explain why real GDP might be an unreliable indicator of the standard of living.

Question 2
Why does unemployment arise and what makes some unemployment unavoidable?

Question 3
Consider the following statement: ‘When the average level of prices of goods and services rises, inflation rises’? Do you agree or disagree? Explain.

Question 4
What is the aggregate demand (AD) curve and why does it slope downwards? Explain.

Question 5
What is the long run aggregate supply (LRAS) curve and why is it vertical? Why does the short run aggregate supply curve slope upwards?