things equal, what effects would each of the following have on aggregate demand or aggregate supply? In each case use a diagram to show the expected effects on the equilibrium price level and the level of real output. a. A reduction in the economy’s real interest rate. b. A major increase in federal spending for health care (with no increase in taxes). c. The complete disintegration of OPEC, causing oil

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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Other things equal, what effects would each of the following have on aggregate demand or aggregate supply? In each case use a diagram to show the expected
effects on the equilibrium price level and the level of
real output.
a. A reduction in the economy’s real interest rate.
b. A major increase in federal spending for health
care (with no increase in taxes).
c. The complete disintegration of OPEC, causing oil
prices to fall by one-half.

d. A 10 percent reduction in personal income tax
rates (with no change in government spending).
e. A sizable increase in labor productivity (with no
change in nominal wages).
f. A 12 percent increase in nominal wages (with no
change in productivity).
g. A sizable depreciation in the international value of
the dollar.

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