*Instructions: Please review the attached; Read 5 course material and Slide 8-10 prior to answering any questions. Review all files thoroughly and answer each questions with a minimum of 100-word count each. Separate your answers by question numbers or letters for an easier breakdown. Use APA format to include in-text citations and a reference page. NO OUTSIDE SOURCES, only source authorized is from the one I provided for you. Here is the reference for the course material attached: Sexton, R. L. (2013). Exploring economics (6th ed.). Mason, OH: South-Western, Cengage Learning. NO PLAGIARISM! No cover/title page required. Let me know if you have any questions or concerns.
1. Compare and contrast the three types of unemployment that are covered in Slides 8-10. If you were a policy maker which type of unemployment would be most bothersome to you?
2. What costs are associated with inflation? Explain at least 3 different costs that individuals or businesses experience when inflation rises.
3. Explain why transfer payments are not included in GDP.
4. Using the components of GDP covered in section 22.1 on page 633-634 (page 2 & 3 on pdf) of your text, explain which component would be affected by the following (only one component should be chosen for each scenario): *no specific word count but please answer each scenario thoroughly by choosing one component to each scenario. Major components of aggregate demand are Consumption (C), Investment (I), government purchases (G), and net exports (X-M).
a. You buy an Italian purse.
b. You buy a new house.
c. New lanes are added to Interstate 40.
d. You buy groceries.
e. You buy a new washer and dryer.
5. Suppose the economy is at a macroeconomic equilibrium as is shown on section 22.6 in the course material. The government decides to give every taxpayer a $500 tax refund. (Please read section 22.6 on page 650 on course material (page 19 on pdf) before answering this question).
a. What happens to the aggregate demand curve after the refund?
b. What happens to the price level after this change?
c. Is real wealth increased or decreased as a result of the refund?
6. Review Section 22.7 in your text starting on page 659 (page 28 on pdf). Compare and contrast the results of the Classical Model and the Keynesian model after an expansionary policy. Keep in mind that the economy is in a recession and not at full employment. Address the following:
a. The shape of the aggregate supply curve in each model in both the long-run and short-run.
b. The effect of an expansionary policy on aggregate demand in both the long-run and short-run.
c. The effect of an expansionary policy on the price level in both the long-run and short-run.