CHAPTER 9

I. Are the following statements true or false? Explain

1. When output increases, unemployment decreases.
2. The aggregate demand curve shows the amount of domestic goods and services that
households, firms, governments, and foreigners want to buy at each price.
3. All other things being equal, technological progress raises the price level.
4. If short-run aggregate supply shift to the right, the short-run price level will be higher.
5. If oil price decreases, the output would increase.

II. Assume that the Vietnamese economy is in a long-run equilibrium. In 2019, a severe drought in the
central region occurred.
1. Using the appropriate model(s), analyze the impact of the above event on Vietnam's price level,
output and employment in the short run.
2. In order to restore production, the Government has issued support policies for agriculture and
farmers. Analyze the impact of policy on the economy.

III. Assume that the Vietnamese economy is in a long-run equilibrium. In 2019, Vietnam's exports
dropped sharply.
1. Using the appropriate model(s), analyze the impact of the above event on Vietnam's price level,
output and employment in the short run.
2. What will government policy be to increase output?