Q-5      Draw the impact on the AS/AD model for each scenario below. Determine the impact on Real GDP, price level, unemployment, and the business cycle. First fill the table and then explain each scenario in few lines.       Use the following terminologies: 1) Real GDP:              Increase           or         decrease         2) Price Level:             Increase           or         decrease           3) Unemployment:      Increase           or         decrease       4) Business Cycle:       Expansion        or         Contraction                                            Use the following lines to show shifting in AD or AS, just drag it to right place and then compare the new equilibrium with the previous one.                                                                                                       TABLE: Just insert the arrows and lines to fill this table.   Scenario Graph It! Real GDP Price Level Unemployment Business Cycle Ministry of Finance passes a tax cut for the middle class and the P.M Imran Khan signs it.           Imports into the Pakistan begin to decline while exports out of the Pakistan rise.           Productions costs rise significantly in many sectors of the economy.

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
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Chapter1: Making Economics Decisions
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Q-5      Draw the impact on the AS/AD model for each scenario below. Determine the impact on Real GDP, price level, unemployment, and the business cycle. First fill the table and then explain each scenario in few lines.

 

 

 

Use the following terminologies:

1) Real GDP:              Increase           or         decrease

 

 

 

 

2) Price Level:             Increase           or         decrease

 

 

 

 

 

3) Unemployment:      Increase           or         decrease

 

 

 

4) Business Cycle:       Expansion        or         Contraction                                       

 

 

Use the following lines to show shifting in AD or AS, just drag it to right place and then compare the new equilibrium with the previous one.

 

 

 

                                                                                     

 

 

 

 

 

TABLE: Just insert the arrows and lines to fill this table.

 

Scenario

Graph It!

Real

GDP

Price

Level

Unemployment

Business Cycle

  1. Ministry of Finance passes a tax cut for the middle class and the P.M Imran Khan signs it.
 

 

 

 

 

  1. Imports into the Pakistan begin to decline while exports out of the Pakistan rise.
 

 

 

 

 

  1. Productions costs rise significantly in many sectors of the economy.
 

 

 

 

 

  1. FBR raises taxes on corporations.
 

 

 

 

 

  1. People feel confident (Tabdeli) about the future of the economy (Consumer confidence).
 

 

 

 

 

 

“Explanations”

Scenarios

Explanations (70 words max. for each)

  1. Ministry of Finance passes a tax cut for the middle class and the P.M Imran Khan signs it.

 

 

 

 

 

  1. Imports into the Pakistan begin to decline while exports out of the Pakistan rise.

 

 

 

 

 

 

  1. Productions costs rise significantly in many sectors of the economy.

 

 

 

 
  1. FBR raises taxes on corporations.

 

 

 

 

 
  1. People feel confident (Tabdeli) about the future of the economy (Consumer confidence).

 

 

 

 
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