QUESTION 5 a. Suppose that some kind of significant economic event has occurred, and y ou learn that the event will definitely cause the aggregate price level to decrease, but that its effect on short-run equilibrium real GDP cannot be determined without knowing the exact magnitude of its effects on Aggregate Supply and Aggregate Demand. Based on this information, do you think that this economic event shifted the Aggregate Demand curve, the Aggregate Supply curve, neither curve, or both curves? And if you think either or both of the curves shifted, indicate in which direction you think they must have shifted. b. The table below describes four sets of economic events. For each event, indicate whether it will shift the AD curve and/or the AS curve to the right (by entering "R"), to the left (by entering "L"), or not at all (by leaving it blank) AD S-R AS Events Shift Shift The government decreases unemployment insurance benefits The Federal Reserve decreases the money supply, and oil prices rise sharply A new technology greatly increases productivity A stock market boom increases household wealth, and then nominal wages increase

QUESTION 5 a. Suppose that some kind of significant economic event has occurred, and y ou learn that the event will definitely cause the aggregate price level to decrease, but that its effect on short-run equilibrium real GDP cannot be determined without knowing the exact magnitude of its effects on Aggregate Supply and Aggregate Demand. Based on this information, do you think that this economic event shifted the Aggregate Demand curve, the Aggregate Supply curve, neither curve, or both curves? And if you think either or both of the curves shifted, indicate in which direction you think they must have shifted. b. The table below describes four sets of economic events. For each event, indicate whether it will shift the AD curve and/or the AS curve to the right (by entering "R"), to the left (by entering "L"), or not at all (by leaving it blank) AD S-R AS Events Shift Shift The government decreases unemployment insurance benefits The Federal Reserve decreases the money supply, and oil prices rise sharply A new technology greatly increases productivity A stock market boom increases household wealth, and then nominal wages increase

Principles of Economics, 7th Edition (MindTap Course List)

7th Edition

ISBN:9781285165875

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter33: Aggregate Demand And Aggregate Supply

Section: Chapter Questions

Problem 5PA

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