f. Technological improvements increase productivity.gram to illustrate and explain how each of the followingwill affect the equilibrium price level and real GDP:a. Consumers expect a recession.b. Foreign income rises.c. Foreign price levels fall.d. Government spending increases.e. Workers expect higher future inflation and negotiateUse an aggregate demand and aggregate supply dia-higher wages now.In th

Answered: Use an aggregate demand and aggregate…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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f. Technological improvements increase productivity.
gram to illustrate and explain how each of the following
will affect the equilibrium price level and real GDP:
a. Consumers expect a recession.
b. Foreign income rises.
c. Foreign price levels fall.
d. Government spending increases.
e. Workers expect higher future inflation and negotiate
Use an aggregate demand and aggregate supply dia-
higher wages now.
In th

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Aggregate demand (AD) refers to the total of individual demand of all markets The AD curve is downward sloping which explains the negative relationship between price and aggregate demand. The component of AD are: consumption spending (C), investment spending (I), government spending (G), and net exports (NX). Aggregate supply (AS) refers to the summation of all individual supply of all markets. The AS curve is upward sloping, which reflects the positive relationship between price and aggregate supply.

a. consumers expect a recession

b. foreign income rise

c. foreign price level fall

d. G increase

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