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1. Which of the following changes will result in a shift of the aggregate demand curve, and which will result in a movement along the curve? If there is a shift, or a movement, be sure to explain in which direction, and why (either up or down, or, right or left). 1 pt each

a. The Fed lowers interest rates.

b. The price level in the economy falls.

c. Wealth decreases.

d. A foreign trading partner s national income increases.

2. With a two panel diagram one panel showing the aggregate expenditure diagram, and the other showing the AD curve show how a decrease consumption shifts the AD curve.
2 pts

3. What will happen to the aggregate supply curve if the price of foreign oil decreases? Will it cause a movement along the curve or a shift of the curve? Explain clearly. 2 pts

4. Is there any difference between the aggregate demand curve and the demand curve for good x? Explain .

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Homework 4 Due: 3/28/12 Name: Econ 261 (10 points) (Please print) Spring 2012 Please staple Dr. Talukdar 1. Which of the following changes will result in a shift of the aggregate demand curve, and which will result in a movement along the curve? If there is a shift, or a movement, be sure to explain in which direction, and why (either up or down, or, right or left). 1 pt each The Fed lowers interest rates. The price level in the economy falls. Wealth decreases. d. A foreign trading partner’s national income increases. 2. With a two panel diagram –one panel showing the aggregate expenditure diagram, and the other showing the AD curve – show how a decrease consumption shifts the AD curve. 2 pts 3. What will happen to the aggregate supply curve if the price of foreign oil decreases? Will it cause a movement along the curve or a shift of the curve? Explain clearly. 2 pts 4. Is there any difference between the aggregate demand curve and the demand curve for good x? Explain . 2 pts 2 pts 3. What will…

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