st of oil rises sharply AS to the left Price level increases Output decreases Recessionary 1. The Government increases spending sharply on infrastructure 2. American goods increase in demand from foreign buyers 3. Immigration into the country increases dramatically 4. Interest rates decrease 5. A technological breakthrough makes companies more productive 6. The government increases regulations on greenhouse gas emissions 7. The government increases subsidies in all sectors of the economy 8. With renewed confidence consumers increase spending for Christmas
6.02 AS-AD Model
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Situation |
Which curve shifts? Which direction? |
Price Level and Output Increase or Decrease |
Recessionary or Inflationary (Will the situation cause a recession or inflation?) |
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The cost of oil rises sharply |
AS to the left |
Price level increases Output decreases |
Recessionary |
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1. The Government increases spending sharply on infrastructure |
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2. American goods increase in |
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3. Immigration into the country increases dramatically |
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4. Interest rates decrease |
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5. A technological breakthrough makes companies more productive |
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6. The government increases regulations on greenhouse gas emissions |
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7. The government increases subsidies in all sectors of the economy |
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8. With renewed confidence consumers increase spending for Christmas |
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