ECON 100 Take Home Assignment No.3

St. Charles Community College 
ECON 100   Survey Economics

Show how the aggregate demand and the short run aggregate supply curves will shift as a result of each of the following scenarios, and explain how the shifts in Ad and SRAS will affect real GDP and the overall price level.

  1. As consumer confidence increases, the Federal Reserve Board takes action to spur the economy.

  2. Prolonged droughts in Brazil and Australia cause a shortage in the world’s production of soybeans.  U. S. farmers are able to benefit from this market disruption by exporting additional quantities of soybeans.

  3. The expansion of oil production in the Russian oil fields causes the world oil prices to drop. (Assume oil is a raw material.)

  4. A serious flu epidemic strikes the west coast of the U. S. causing high and broad-based worker absenteeism.  Output is severely interrupted.

  5. When interest rates drop, investors begin building shopping centers and large commercial buildings.

  6. Congress lowers federal business taxes.

  7. The “war on terrorism” causes increased governmental expenditures at the federal, state, and local level.

  8. A new and more efficient electrical power grid system linking power transmission systems across the country becomes operational.

  9. A new, federal, clean air law is passed that decreases the permissible level of greenhouse gas emissions that firms can emit.

  10. During a recession in this country, our European and Asian trading partners also face recessions.