Consider the figure to the right. What are the three effects of decreases in the price level, and do these generate upward or downward movements along the economy's aggregate demand curve? The three effects of changes in the price level are A. the real-balance effect, the income effect, and the wealth effect. B. the substitution effect, the income effect, and the wealth effect. C. the real-balance effect, the interest rate effect, and the open economy effect. OD. the real-balance effect, the interest rate effect, and the wealth effect. When the price level falls, these three effects work together to generate downward movements along the economy's aggregate de and curve. 4 Price Level 120 115 ********* 110

Determine whether each of the following would cause a shift of the aggregate demand curve, a shift of the aggregate supply curve, a shift in neither curve, or shift in both curves.      If a shift is caused, indicate which curve shifts, and in which direction it shifts. What happens to aggregate output and the price level in each case?  4. The wages rate decreases.

What is the effect of an increase in the price level when the money wage rate remains​ unchanged?     A. Aggregate supply increases.   B. Potential GDP increases.   C. The quantity of real GDP supplied increases.   D. Resource prices increase by the same percentage as the increase in the price level.

You have been hired as a Marco Economist by the President of the United States to help evaluate the recentannouncement by Federal Reserve chairman Ben Bernanke that the FED will be increasing interest rates again.Ben Bernanke has justified the move on the grounds that the economy continues to be strong. Answer thefollowing questions. Provide a graphical explanation for your answers whenever possible. 1. What is the fed trying to do?A. slow down the economyB. stimulate the economyC. remains unchanged 2. How is the fed doing it?A. buying bondsB. selling bondsC. remains unchanged 3. What happens to bond prices?A. increaseB. decreaseC. remains unchanged 4. What happens to the interest rate?A. increaseB. decreaseC. remains unchanged

According to Say's law, aggregate demand is always equal to aggregate supply. O True O False

3. Under what circumstances an aggregate demand curve would shift either to the right or left? Provide some real world examples.