King Saud University Macroeconomic Worksheet
Description
please answer these two questions
Q1/Ahmed can make several uses of his money. Indicate for each case whether his money is being used as a medium of exchange (E), a store of value (V), a unit of account (A), or a standard of deferred payment (P).
a. Ahmed has accumulated SR600 in his checking account at a depository institution.
b. Ahmed decides to use this SR600 to purchase an electronic machine and goes shopping to compare the prices being charged by different stores for the machine he wishes to buy.
c. Ahmed finds that the lowest price at which he can purchase the machine he wants is SR498.50. He has the dealer deliver the machine and agrees to pay the dealer in 30 days.
d. Thirty days later Ahmed send the dealer a check drawn from his checking account to pay for the machine.
Q2/Suppose that aggregate supply decreases while aggregate demand is held constant.
a. What happens to the price level?
b. What happens to national output?
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