Assume an economy operates in the intermediate range of its aggregate supply curve. For each of the following changes in conditions, state the direction of the effect on: aggregate demand, aggregate supply, price level, real GDP. (a) A decrease in government expenditure in infrastructure (b) A severe recession occurs in a country which has been a major importer of the nation’s exports. (c) The federal government increases business taxes   with diagram

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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Assume an economy operates in the intermediate range of its aggregate supply
curve
. For each of the following changes in conditions, state the direction of the
effect on: aggregate demand, aggregate supply, price level, real GDP.
(a) A decrease in government expenditure in infrastructure

(b) A severe recession occurs in a country which has been a major importer of the
nation’s exports.

(c) The federal government increases business taxes

 

with diagram 

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