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.
- As consumer confidence increases, the Federal Reserve Board takes action to spur the economy.
- 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.
- The expansion of oil production in the Russian oil fields causes the world oil prices to drop. (Assume oil is a raw material.)
- A serious flu epidemic strikes the west coast of the U. S. causing high and broad-based worker absenteeism. Output is severely interrupted.
- When interest rates drop, investors begin building shopping centers and large commercial buildings.
- Congress lowers federal business taxes.
- The “war on terrorism” causes increased governmental expenditures at the federal, state, and local level.
- A new and more efficient electrical power grid system linking power transmission systems across the country becomes operational.
- A new, federal, clean air law is passed that decreases the permissible level of greenhouse gas emissions that firms can emit.
- During a recession in this country, our European and Asian trading partners also face recessions.