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What are the major factors causing a shift in aggregate demand (inward or outward)? What are the major factors that will affect short-run aggregate supply? Long-run aggregate supply?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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How does the economy return to equilibrium in response to changes in aggregate demand (AD) and aggregate supply (AS) in both the short run and long run.
A rightward shift in the aggregate supply curve with no change in the aggregate demand curve signals an economic expansion. True or False?
From March 2009 to 2013, the U.S. stock market more than doubled in value. How might this have affected aggregate demand? What happens to aggregate demand when the stock market plunges?
The following events shift either aggregate demand, aggregate supply, both or neither. Using a diagram, illustrate the effect of the events on the economy. In particular, explain the effect of each event on price level, real GDP and equilibrium in the economy. A) A recent business survey reported that business confidence has declined. B) Government cuts the rate of personal income tax after a pandemic caused an economic slowdown. C) A recent flooding in a small rural region destroyed the potato crop. D) A booming economy in a neighbouring country has drawn many working age people (and their families) to emigrate there in search of jobs and better life.
What effects would each of the following have on aggregate demand or aggregate supply? Justify your answer. In each case use a diagram to show the expected effects on the equilibrium price level and real output level in the economy. Assume that all other things remain constant and prices are inflexible downward. (a) A reduction in interest rates at each price level (b) A sizable increase in labor productivity. (c) The nation’s currency appreciates against its major trading partners .
What are the major factors that will affect short-run aggregate supply and long-run aggregate supply?
QUESTION 2 Explain whether each of the following events will increase, decrease or have no effect on long-run aggregate supply. a) Malaysia experiences a wave of immigration. b) Intel invents a new and more powerful computer chip. c) Tenaga Nasional Berhad (TNB) invests in new electricity transmission technology. d) A severe flood damages factories in Pahang.
Why does the short-run aggregate supply curve slope upward to the right? If the prices of both (a) resources and (b) goods and services increased proportionally (by the same percentage), would business firms be willing to expand output? Why or why not?
Suppose that an economy wants to boost available labor hours in order to increase aggregate supply. What is the best way to accomplish this?
Describe the change in aggregate supply that should result from each of the following changes in determinants. Assume that nothing else is changing besides the identified change. (In your answer, indicate whether the change will "Decrease" or "Increase" aggregate supply or have no effect.) (a) A rise in the average price of inputs; (b) An increase in worker productivity; (c) Government antipollution regulations become stricter; (d) A new subsidy program is enacted for new business investment in productive equipment; (e) Energy prices decline.
If the economy’s labor force is increasing and also becoming more productive, what will happen to the aggregate supply curve?
The government passes a law that all employees must double the wage they are paying their workers. Which curve on the aggregate demand and short-run aggregate supply curve will move, and in which direction?