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Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383

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BuyFindarrow_forward

Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383
Textbook Problem

Fill in the blank spaces (A–Z) in the table that follows.

images

To determine

Describe the shift in AD or SRAS curve.

Explanation

Wealth rises:

If wealth increases, the interest rate and income tax decrease and household expect higher price or income in the future, then the consumption will increase it leads to shift the aggregate demand (AD) curve to rightward.

Business taxes fall:

If business taxes fall, then the businesses become optimistic about future sales and investment will decline, it leads to shift the aggregate demand (AD) curve to rightward.

Dollar depreciate:

If dollar value depreciates, the US exports will increase and US import will decrease, as a result the US net export will increase. Thus, decrease in dollar value will lead to shift the aggregate demand (AD) curve to rightward.

Wage rate falls:

If wage rate decreases, then the price level for the goods and services will decrease and the output or real GDP will increase. Thus, decrease in wage rate leads to shift the short run aggregate supply (SRAS) curve to rightward.

Adverse supply shock:

If there is adverse shock, then the short run aggregate supply curve (SRAS) decreases it leads to shift the short run aggregate supply curve (SRAS) curve to leftward.

Government purchases rise:

 If government purchase increases, then the price level for the goods and services will increase and the output or real GDP will increase. Thus, increase in government purchase will leads to shift the aggregate demand (AD) curve to rightward.

Interest rate increases:

If interest rate increases, the business taxes will increase or if businesses become pessimistic about future sale and this cause investment to increase as a result it leads to shift the aggregate demand (AD) curve to rightward...

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