What effects would each of the following have on aggregate demand or aggregate supply, other things equal? In each case explain the expected effects on the equilibrium price level and the level of real output, assuming that the price level is flexible both upward and downward. · A reduction in interest rates at each price level. · A major increase in spending for health care by the Federal government. · A 10 percent across-the-board reduction in personal income tax rates. · A sizable increase in labor productivity (with no change in nominal wages). · An increase in exports that exceeds an increase in imports (not due to tariffs).
What effects would each of the following have on aggregate demand or aggregate supply, other things equal? In each case explain the expected effects on the equilibrium price level and the level of real output, assuming that the price level is flexible both upward and downward. · A reduction in interest rates at each price level. · A major increase in spending for health care by the Federal government. · A 10 percent across-the-board reduction in personal income tax rates. · A sizable increase in labor productivity (with no change in nominal wages). · An increase in exports that exceeds an increase in imports (not due to tariffs).
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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What effects would each of the following have on aggregate demand
or
effects on the
that the price level is flexible both upward and downward.
·
A reduction in interest rates at each price level.
·
A major increase in spending for health care by the Federal
government.
·
A 10 percent across-the-board reduction in personal income tax
rates.
·
A sizable increase in labor productivity (with no change in
nominal wages).
·
An increase in exports that exceeds an increase in imports (not
due to tariffs).
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