1. For each of the statement below determine if it shifts the aggregate demand or short-run aggregate supply curve. In which direction does it shift -- is it anincrease or decrease. Thereafter, determine how this shift affects Real GDP and the Price Level in the short run i.e. does it increase or decrease Real GDP? thePrice Level?An increase in government purchasesA major improvement in technologyA reduction in net exports

Answered: 1. For each of the statement below…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

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1. For each of the statement below determine if it shifts the aggregate demand or short-run aggregate supply curve. In which direction does it shift -- is it an
increase or decrease. Thereafter, determine how this shift affects Real GDP and the Price Level in the short run i.e. does it increase or decrease Real GDP? the
Price Level?
An increase in government purchases
A major improvement in technology
A reduction in net exports

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A shift in AS can be credited to numerous factors, remembering changes for the size and quality of labour, innovation, and expansion in cost of production, changes in the producer tax rate, and endowments and changes in inflation. The AD will in the general move to leftward when absolute customer spending decays. Buyers may spend less in light of the fact that the average cost for basic items is rising or in light of the fact that administration taxes have expanded. Customers may choose to spend less and save more in the event that they anticipate that prices should ascend later on.

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