Determine the effect on aggregate demand/ Short Run Agrregate supply of each of the following events. Explain whether it represents a movement along the aggregate demand/ Short run Aggregate supply curve (up or down) or a shift of the curve (leftward or rightward).
Determine the effect on aggregate
events. Explain whether it represents a movement along the aggregate demand/ Short run
supply curve
a) News of a worse-than-expected job market next year
b) A rise in the
c) A rise in legally mandated retirement benefits paid to workers leads producers to reduce
output.
d) As a result of an increase in the value of the dollar in relation to other currencies, American
producers now pay less in dollar terms for foreign steel, a major commodity used in production.
e) An increase in the quantity of money by the Federal Reserve increases the quantity of money
that people wish to lend, lowering interest rates.
f) Greater union activity leads to higher nominal wages.
g) A fall in the aggregate price level increases the
money holdings. As a result, they borrow less and lend more
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