1. One type of government intervention in the market takes place through price ceilings and price floors.

Assignment #2: AD and AS/Economic Growth Assignment Week 3 Due Sunday 11:59p in 1. One type of government intervention in the market takes place through price ceilings and price floors. In the graph above, for each price level ($1, $2, $3, and $4), which one would be the best example of a price ceiling? At the price ceiling you identified what would be happening in terms of quantity demanded and quantity supplied. 2. At the macroeconomic level, we look at an 'aggregate' of economic activity instead of individual demand and supply of a good or service. Aggregate Demand, Aggregate Supply and long run Aggregate Supply make up the aggregate or macroeconomic model. Keynes believed that the aggregate economy did not necessarily fluctuate freely to reach potential income (the equilibrium point) and that actions could be taken assist the economy in reaching its potential. Look at the graph below, a decrease in input prices in the short run is like to cause a movement in the supply curve. How is the change represented in the graph below? 3. What does it mean to be in long term vs. short term equilibrium? What point reflects both long term equilibrium and short term equilibrium on the graph below? 4. Of the 5 generally agreed upon economic growth policies outlined in Chapter 27 of your text, select one to describe how you see this policy promoting economic growth. 5. What is the difference between the structural stagnation hypothesis and secular stagnation theory