Worksheet Week 11: AD-AS Model What Is the Effect on AD? (30 pts) Determine the effect on the short-run aggregate demand (AD) curve for each of the following scenarios and sketch a graph to illustrate each answer. 1. A decrease in consumer wealth is due to a plunge in stock prices. 2. Households and businesses have more optimistic expectations regarding future economic performance. 3. There are higher levels of investment spending by businesses. 4. The government cuts taxes for households and businesses. 5. The Fed decreases the money supply.

Worksheet Week 11: AD-AS Model What Is the Effect on AD? (30 pts) Determine the effect on the short-run aggregate demand (AD) curve for each of the following scenarios and sketch a graph to illustrate each answer. 1. A decrease in consumer wealth is due to a plunge in stock prices. 2. Households and businesses have more optimistic expectations regarding future economic performance. 3. There are higher levels of investment spending by businesses. 4. The government cuts taxes for households and businesses. 5. The Fed decreases the money supply.

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter8: Aggregate Demand And The Powerful Consumer

Section: Chapter Questions

Problem 8DQ

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