3. Suppose that we observe a fall in expected rate of return. Which graph most accurately shows how this would affect the aggregate demand - aggregate supply model? Note that the new curve is shown in gray. a. AD curve shifts left: b. AS curve shifts right: c. AD curve shifts right: d. AS curve shifts left:

1. Discuss what factors shift the LRAS curve to the right (what increases long run aggregate supply). 2. Explain the following shifts by using the LRAS-AD diagram : a) Increase in both equilibrium real GDP and price level. b) A decrease in equilibrium real GDP and an increase in price level.

28. Assuming Aggregate Demand and Aggregate Supply are initially at ADo and ASo, and AD1 and AS1 represent changes, which of the above graphs depict the economy's self-correcting mechanism at work? a) Figures A & B b) Figures A & C c) Figures C & D d) Figures B & D

3. Using aggregate demand and aggregate supply analysis, show the effects of the following (Assume neo-Keynesian AD and AS curves.): a. deflation b. an increase in investment spending c. an increase in the average wage rate d. an income tax cut

Explain the effect, if any, that each of the following occurrencesshould have on the aggregate demand curve.a. The Fed lowers the discount rate.b. The price level decreases.c. The federal government increases federal income tax rates inan effort to reduce the federal deficit.d. Pessimistic firms decrease investment spending.e. The inflation rate falls by 3 percent.f. The federal government increases purchases to stimulatethe economy.

2. The aggregate demand curve is best represented by which of the following equations? AD=C+I+G + NX AD=C+I+ G - NX AD=C+I+ G AD=C+I O AD=C+I- G - NX

8a. Assume that an economy is at equilibrium at its potential GDP at $10 trillion and aprice level of 100. What would be the short-run impact of a significant fall in consumer confidence about the future? Provide an AD/AS model to support your answer. b. What policy would you recommend to the chairperson of the Federal Reserve? Be specific. Show the effect of this policy on your graph part a. c. What are the major goals of the Fed's monetary policy?

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Which of the following is an assumption of the aggregate demand-aggregate supply model? A. An economy is always at full-employment level in the short run. B. Capital stock cannot be varied in the short run. C. Producers are reluctant to change prices of their products even in the long run. D. Long-run aggregate supply curve slopes upward.

Suppose the government reduces the corporate income tax rate. This will increase the return to firms for investing, which should investment and cause in capital in the long run. Show the long-run effect of this reduction in corporate tax rates on long-run aggregate supply. 1.) Use the line drawing tool to show the effect on long-run aggregate supply, Properly label this lino, 2.) Use the point drawing tool to show the new long-run equilibrium on the graph. Label this point 'B'. Carefully follow the instructions above, and only draw the required objects. The long-run impact of a reduction in corporate tax rates would be OA a decrease in long-run potential output while actually reducing inflation.. OB. an decrease in long-run potential output while creating additional upward movements in prices. OC. an increase in long-run potential output while actually reducing inflation OD. an increase in long-run potential output while creating additional upward movements in prices. Price Level, P…