Questions 40 - 43: For each of the following, describe the change in aggregate s
ID: 1177114 • Letter: Q
Question
Questions 40 - 43: For each of the following, describe the change in aggregate supply (Write DECREASE or INCREASE.) that would result from each of the following changes in determinants. Assume that nothing else is changing besides the identified determinant.
40. A rise in the average price of inputs
41. An increase in worker productivity
42.Government antipollution regulations become less strict
43. A new subsidy program is enacted for new business investment in productive equipment
Questions 44-46: Explain each of the following outcomes as the result of a shift in AGGREGATE DEMAND or AGGREGATE SUPPLY. (IT CAN BE ONLY ONE!) Also, GIVE the direction of the shift (Write DECREASE or INCREASE).
44.A recession deepens while the rate of inflation increases
45.The price level rises sharply while real output and employment increase
46. Real output rises, unemployment rate falls, and the price level rises
Explanation / Answer
40) Decrease
41 )Increase
42)Decrease (unless the increase in antipollution device production outweighs the decline in production caused by the increased cost of the regulations)
43)Increase
44 )The aggregate supply curve has shifted to the left causing the price level to rise and output and employment levels to fall.
45) The aggregate demand curve has shifted to the right.
46) The aggregate demand curve has shifted rightward.
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