***Please answer question number 3 **1. In the following table, determine how each event likely affects potential output (a.k.a., long-run aggregate supply).**| Event | Direction of Potential Output Shift ||---------------------------------------------------------------------------------------|--------------------------------------|| | Left | Right | No Shift || The government allows more immigration of working-age adults. | | | || For environmental and safety reasons, the government requires that the country’s nuclear power plants be permanently shut down. | | | || An investment tax credit increases the rate at which firms acquire machinery and equipment. | | | |**2. In the following table, determine how each event affects the position of the aggregate demand curve.**| Event | Direction of AD Curve Shift ||-------------------------------------------------------------------------------------------|------------------------------|| | Left | Right | No Shift || A decrease in consumer confidence (suggests people believe a contraction/recession coming) | | | || A decrease in individual income tax rates | | | || An increase in the value/price of housing | | | |**3. What effect would an increase in aggregate demand have on price levels and GDP?****4. What effect would an increase in aggregate supply have on price levels and GDP?**

3. The aggregate demand is the summation of the demand from all the economic agents such as the…

Answered: 3. What effect would an increase in…

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3. What effect would an increase in aggregate demand have on price levels and GDP?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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