Macmillan Learning A positive demand shock will result from: a sudden increase in nominal wages. an increase in potential GDP. a move by the Bank of Canada to lower the interest rate. consumers and firms becoming more pessimistic.

"The oil price run - up of 2007 - 08 was caused by strong demand confronting stagnating world production. Although the causes were different, the consequences for the economy appear to have been very similar to those observed in earlier episodes, with significant effects om overall consumption spending and purchases of domestic automobiles in particular. The experience of 2007 - 08 should thus be added to this list of recessions to which oil prices appear to have made a material contribution". Oil price shocks have an evident impact on the short run aggregate supply curve. With the help of a graph demonstrate how rising oil prices affect the SRAS and explain what other factors can cause this shift.

(23) Assume that the economy begins in long-run equilibrium and that the federal reserve decides to use open market operations to sell bonds. In the short run, what happens to the price level? Group of answer choices (A) It goes down. (B) It goes up. (C) It stays the same.

Suppose we have a market with upward sloping supply and downward sloping demand curves. After which of the following shocks can we guarantee that equilibrium price will increase? A shock which simultaneously shifts the supply curve downwards and the demand curve upwards. A shock which shifts the demand curve downwards. A shock which simultaneously shifts the supply curve downwards and the demand curve downwards. A shock which shifts the supply curve upwards. More than one of the above.