Essentials of Economics 2nd Edition by Campbell McConnell, Randy Grant, Stanley Brue

Exercise 5

Other things equal, what effects would each of the following have on aggregate demand or aggregate supply In each case use a diagram to show the expected effects on the equilibrium price level and the level of real output.LO2
a. A reduction in the economy's real interest rate.
b. A major increase in Federal spending for health care (with no increase in taxes).
c. The complete disintegration of OPEC, causing oil prices to fall by one-half.
d. A 10 percent reduction in personal income tax rates (with no change in government spending).
e. A sizable increase in labor productivity (with no change in nominal wages).
f. A 12 percent increase in nominal wages (with no change in productivity).
g. A sizable depreciation in the international value of the dollar.