Explain the reason for any shift in ad- as curve

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Reference no: EM13817496

1. Using AD-AS diagrams, graphically illustrate and explain how each of the following will affect the overall price level and real GDP in the US in the short run (disregard the self-correcting mechanism). Briefly explain the reason for any shift in AD/AS curve.

a. Consumers expect a recession.

b. Foreign income rises.

c. Workers expect higher inflation and negotiate higher wages now.

d. Dollar appreciates.

e. Interest rate drops.

f. China's stock market crashes pushing the Chinese economy into a recession.

2. During the Great Depression, the US economy experienced a falling price level and declining real GDP. Using an AD-AS diagram, graphically illustrate and explain how this transpired.

3. From time to time, a concern arises that skyrocketing crude oil prices will contribute to a global stagflation. Using an AD-AS diagram, graphically illustrate and explain how this can transpire.

Reference no: EM13817496

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