Document1 Word Table Tools Sign in File Home Insert Draw De

Document1 - Word Table Tools Sign in File Home Insert Draw Design Layout ReferencesMailings Review View Help Design LayoutSearch ?Share Find : Replace Select Editing Cut Copy Paste f Blu-mx, x\' A- · ·? .. .E \'Norma TAO Spac Heading 1 Heading 2 Title Subtitle Subtle Em Em phasis >S Format Painter Fant Paragraph Styles Complete the following. Write your answers in the green spaces. When you are finished, save your work and upload it to the appropriate folder in the Assignments section of D2L. 0.5 0,4 0.1 Real GDP (S billions) Real GDP ($ billions) Page 1 ?12 2t1 21 5 words Lis + 100% Type here to search 1:51 PM 6/2/2018

Solution

1) Stock market boom increases the confidence of people so aggregate demand is increased. AD curve shifts to the right which shows in graph B.

2) Sudden hurricane temporarily disabling productive capital and equipment in the southern part of the nation which decreases the supply temporarily. Supply curve shifts to the left which shows in graph C

3) The decrease in the exchange rate makes export cheaper and import costly so net export rises. As net export rises aggregate demand will be increased and demand curve shifts to the right. Which shows in graph B

4) A permanent increase in average temperature, making it harder to grow the agricultural product. Supply is decreased permanently. So LRAS and SRAS both shifts to the left. Which shows in graph E.

5) Permanent decrease in planetary oil reserve. It means supply will be decreased permanently in the long run. Both SRAS and LRAS shifts to the left. Which shows in graph E.

6) Increase in wages results in the decrease in the demand for the employee. It decreases the aggregate demand which shifts the demand curve to the left. Which shows in graph A

7) Reduction in the interest rate decrease the cost of borrowing so investment will be increased and also mortgage interest payment decreases, all of it increases aggregate demand. Demand curve shifts to the right. Which shows in graph B.

8) Reduction in tax increases aggregate demand. So demand curve shifts to the right. Which shows in graph B.

9) Increases in government spending increase aggregate demand which shifts the demand curve to the right. Which shows in graph B.

10) When confidence of the consumers are increased, it boosts their demand so demand curve shifts to the right in the short run results in an increase in the prices in the short run and increase in real GDP. In the long run, supply will be decreased and supply curve shifts to the left until it intersects the new demand curve and long-run aggregate supply. So in the long run equilibrium is restored.