ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Question

Question 1)

a) In panel (a) the curve shifts upward, what could cause this? 
O Increase in G (govermment spending)
O Decrease in HH wealth due to a decrease in housing prices
O An increase in the overall price level
o Areduction in govemment spending (G)

b) Using Figure 2, if this economy is currently at Y1 and consumer wealth increases, then___
O AD1 will shift to the left, reflecting a decrease in the real GDP at every price level.
O AD1 willshift to the right. reflecting an increase in the real GDP at every price level.
O an upward movement along the AD1 wiltake place., reflecting an increase in the price level.
O a downward movement along the AD1 will take place, reflecting a decrease in the price level.

In Panel (a) the AE curve shifts upward, what could cause this? Figure 2 Planned aggregate spending, AEPlanned (billions of dollars) $4,000 3,500 3,000 2,400 2.000 1,200 800 Aggregate price level (a) Change in Income- Expenditure Equilibrium GDP E₁ $500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 YI Y (b) Shift of the AD Curve E₁ AD₁ AE Panned AE Planned, E₂ AD₂ Real GDP (billions of dollars) Real GDP
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Transcribed Image Text:In Panel (a) the AE curve shifts upward, what could cause this? Figure 2 Planned aggregate spending, AEPlanned (billions of dollars) $4,000 3,500 3,000 2,400 2.000 1,200 800 Aggregate price level (a) Change in Income- Expenditure Equilibrium GDP E₁ $500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 YI Y (b) Shift of the AD Curve E₁ AD₁ AE Panned AE Planned, E₂ AD₂ Real GDP (billions of dollars) Real GDP
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