In the AS-AD model, at a given price level, a decrease in the expected price level shifts: the aggregate demand curve down. the aggregate supply curve down. the aggregate supply curve up. O the aggregate demand curve up.
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- Using the AD-AS model, if consumers and business become more optimistic about the future direction of the economy and increase spending, then: a-long-run aggregate supply will decrease. b-aggregate demand will decrease. c-aggregate demand will increase. d-long-run aggregate supply will increase.An increase in the expected price level shifts the short-run aggregate supply curve to the right and an increase in the actual price level shifts SRAS to the left right and an increase in the actual price level does not shift the SRAS left, and an increase in the actual price level shifts SRAS to the right left and an increase in the actual price level shifts SRAS to the leftimprovements in productivity shift the aggregate supply curve outward. true false
- Figure 1: Hayek’s (Classical) AD-AS Model Economics Online. (n.d.). Aggregate Demand. Retrieved from http://economicsonline.co.uk/Managing_the_economy/Aggregate_demand.html Hayek says that markets will heal themselves and that government should not intervene. How does the AD-AS model reflect Hayek’s idea that governments cannot increase real GDP beyond the level that the free market economy is able to produce? Do you believe that the Hayek’s classical AD-AS model explain the factors that cause changes (shifts) in AS realistically? Why or why not? Figure 2: Keynes’s AD-AS Model Economics Online. (n.d.). Aggregate supply. Retrieved from http://www.economicsonline.co.uk/Managing_the_economy/Aggregate+supply.html 2.1. In Figure 2 above, what are the factors that may cause the aggregate demand to shift from AD to AD1? What is the difference between demand pull inflation, cost push inflation and recession? 2.2. In macroeconomics, the immediate short run is known as a length…Which of the following would shift aggregate demand to the right? Choose all that apply. Group of answer choices Increasing imports. Increasing exports. Increasing taxes. Increasing consumer confidence.A visual/graphic representation of how a decrease in consumer spending shifts the aggregate demand curve.
- What is the difference between short-run aggregate supply and long-run aggregate supply In the AD-AS model? The short-run aggregate supply curve is sloping upwards while the long-run aggregate supply curve is sloping A upwards. The short-run aggregate supply curve is sloping downwards while the long-run aggregate supply curve is B horizontal. The short-run aggregate supply curve is sloping upwards while the long-run aggregate supply curve is vertical. The short-run aggregate supply curve is sloping downwards while the long-run aggregate supply curve is horizontal.Which of the following would not shift the aggregate demand curve to the left? Group of answer choices An decrease in government spending. An increase in income taxes. A stock market boom. A decrease in the money supply.If the economy experiences inflation and economic growth, this means that aggregate demand grows by more than aggregate supply. True or False
- Complete the table by indicating the change in each determinant necessary to decrease aggregate demand. Change Needed to Decrease AD Wealth Taxes Expected rate of return on investment Incomes in other countriesWhich combination of factors would most likely increase aggregate demand? Pick your answer from below and explain your answer choice using aggregate demand and aggregate supply. An increase in household indebtedness and a decrease in net exports. An increase in consumer wealth and a decrease in interest rates. An increase in net exports and a decrease in government spending. An increase in business taxes and a decrease in profit expectations.Which of the following scenarios would result in a decrease in Aggregate Demand? A) The congress passes a new income tax cut. B) A rise in imports from Europe C) A decline in investors confidence causes investment to fall. D) Technology improvements lead to productivity gains