1. On page 236 in the text (Figure 12.2), your author lists the many factors tha
ID: 1254460 • Letter: 1
Question
1. On page 236 in the text (Figure 12.2), your author lists the many factors that may shift the aggregate demand curve of the U.S. economy. Which one (1) of these do YOU think is most critical to the current performance (Fall,2011) of the U.S. economy? WHY?2. Explain how the three major factors discussed in the text can cause a shift in the aggregate supply curve.
3. What must occur to Aggregate Demand and Aggregate Supply in order for the U.S. economy to experience an increase in Real GDP,and at the same time, not experience a significant increase in the price level?
Explanation / Answer
1. The major factors are consumption, investment, government spending, and net-exports. In Fall of 2011, government spending was increasing rapidly. This is what was supporting aggregate demand. 2. I don't have your text, but the three major factors discussed are likely land, labor, and capital. If any of these increases, the supply curve shifts to the right. If any of these decreases, the supply curve shifts to the left. 3.The aggregate supply and aggregate demand must both increase in the same magnitude in order for Real GDP to increase while the price level remains constant.
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