Exam 37: Structural Stagnation and Globalization

Demonstrate what would happen to a country's trade deficit if the value of a country's exchange rate fell.Assume the economy begins with LAS,SAS and WAS₀.

What does a fall in the exchange rate do to a country's potential output and long run aggregate supply?

Which group has fared the worst in the globalization process?

Refer to the graph. The economy begins at a level of output of $20 billion and experiences a one-year recession in which output declines by 4 percent. What is output in year 1?

Which of the following would shift the world supply curve up?

The globalized AS/AD model takes trade into account, while the standard AD/AS model does not.

According to the hypothesis, when did structural stagnation begin?

What is meant by import-led stagnation?

Why does fiscal policy in the globalized AS/AD model have a different effect than fiscal policy in the standard AS/AD model?

State the structural stagnation hypothesis

In the globalized AS/AD model, the world supply curve is:

After the Great Depression, an explanation for why output growth would stop is called:

Globalization is an ongoing process because:

To remain on its growth trend, an economy must grow more in an expansion than it fell during a recession.

Which of the following would help eliminate the trade deficit?

What adjustment forces would one have expected to resolve structural stagnation in the globalized AS/AD model? Why didn't they occur in the recent U.S.case?

In the graph shown, an upward shift in the WAS curve:

Refer to the graph. Economic output in year 0 is $20 billion. What is potential output in year 1?

According to structural stagnationists, expansionary monetary and fiscal policy has allowed the economy to address its structural problems and adjust in an expedient manner.

A trade surplus results when the world supply curve is below the domestic economy's price level.