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1. Aggregate Demand curves slope down. Explain in a sentence what that means (what happens when Price Level falls, all else constant?) and give one reason for the negative slope (inverse relation). 2. Assume an economy operates in the intermediate range of its aggregate supply curve. State the direction of shift for the aggregate demand curve or aggregate supply curve for each of the following changes in conditions. What is the effect on the price level? On real GDP? On employment? a. The price of crude oil rises significantly (300%. say) raising the price of energy generally. b. Spending on national defense doubles. c. Investment spending falls as firms expect slower sales growth. d. An improvement in technology raises labor productivity. e. The United States raises exports of new passenger aircraft to China. 3. Identify the three ranges of the aggregate supply curve. Explain the impact of an increase in aggregate demand in each range.

1. Aggregate Demand curves slope down. Explain in a sentence what that means (what happens when Price Level falls, all else constant?) and give one reason for the negative slope (inverse relation). 2. Assume an economy operates in the intermediate range of its aggregate supply curve. State the direction of shift for the aggregate demand curve or aggregate supply curve for each of the following changes in conditions. What is the effect on the price level? On real GDP? On employment? a. The price of crude oil rises significantly (300%. say) raising the price of energy generally. b. Spending on national defense doubles. c. Investment spending falls as firms expect slower sales growth. d. An improvement in technology raises labor productivity. e. The United States raises exports of new passenger aircraft to China. 3. Identify the three ranges of the aggregate supply curve. Explain the impact of an increase in aggregate demand in each range.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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1. Aggregate Demand curves slope down. Explain in a sentence what that means (what happens when Price Level falls, all else constant?) and give one reason for the negative slope (inverse relation). 2. Assume an economy operates in the intermediate range of its aggregate supply curve. State the direction of shift for the aggregate demand curve or aggregate supply curve for each of the following changes in conditions. What is the effect on the price level? On real GDP? On employment? a. The price of crude oil rises significantly (300%. say) raising the price of energy generally. b. Spending on national defense doubles. c. Investment spending falls as firms expect slower sales growth. d. An improvement in technology raises labor productivity. e. The United States raises exports of new passenger aircraft to China. 3. Identify the three ranges of the aggregate supply curve. Explain the impact of an increase in aggregate demand in each range.
Transcribed Image Text:1. Aggregate Demand curves slope down. Explain in a sentence what that means (what happens when Price Level falls, all else constant?) and give one reason for the negative slope (inverse relation). 2. Assume an economy operates in the intermediate range of its aggregate supply curve. State the direction of shift for the aggregate demand curve or aggregate supply curve for each of the following changes in conditions. What is the effect on the price level? On real GDP? On employment? a. The price of crude oil rises significantly (300%. say) raising the price of energy generally. b. Spending on national defense doubles. c. Investment spending falls as firms expect slower sales growth. d. An improvement in technology raises labor productivity. e. The United States raises exports of new passenger aircraft to China. 3. Identify the three ranges of the aggregate supply curve. Explain the impact of an increase in aggregate demand in each range.
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Assume an ecomy operates in the intermediate range of its aggregate supply curve. State the direction of shif for the aggregate demand curve or aggregate supply curve for each of the following changes in conditions. What is the effect on the price level? On real GDP? On employment?

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