When production costs rise, in the short run:       A.  the aggregate-supply curve shifts down to the right     B.  the aggregate-demand curve shifts down to the left     C.  the aggregate-demand curve shifts up to the right     D.  the aggregate-supply curve shifts up to the left     E.  both the aggregate-demand curve and the aggregate-supply curve shift to the left

Use Table 26.3 to answer the following questions. Sketch an aggregate supply and aggregate demand diagram. What is the equilibrium output and price level? If aggregate demand shifts right, what is equilibrium output? If aggregate demand shifts left, what is equilibrium output? In this scenario, would you suggest using aggregate demand to alter the level of output or to control any inflationary increases in the price level?

If households decide to save a larger portion of their income, what effect would this have on the output, employment, and price level in the short run? What about the long run?