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Increase in the aggregate demand

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Reference no: EM131415582

1. Explain how the following changes in aggregate demand or short-term aggregate supply, other things being unchanged, are likely to affect the level of total output and he price level in the short run.

a. An increase in the aggregate demand

b. A decrease in aggregate demand

c. An increase in short-run aggregate supply

d. A reduction in short-run aggregate supply.

2. Use the model of aggregate demand and short-run aggregate supply to explain how each of the following would effect real GDP and the price level in the short-run.

a. An increase in government purchases

b. A reduction in nominal wages.

c. A major improvement in technology

d. A reduction in net exports.

Reference no: EM131415582

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