Supply
The aggregage supply curve slopes __?
Upward
the aggregate demand curve slopes ____?
Downward
Market: concert tickets
Graph the change in supply and/or demand if Drake announces his final nationwide tour
*make sure to label your graph*
Demand shift right / increase in demand
If LRAS is to the right of the equilibrium point, what does this say about the economy?
In the long run, aggregate supply is typically what shape?
If prices in the stock market rise, and household wealth increases, what effect does this have on aggregate demand?
Increased demand / shift right
More money in people's pockets leads to more consumption
Market: Cars
Graph the change in supply and/or demand if the production of cars increases due to surplus of parts
*make sure to label your graph*
Supply shifts right / increase in supply
When graphing aggregate supply and demand, what labels go on the x and y axis
x-axis: Real GDP / output
y-axis: Price level
If there is an increase in overall productivity, output will __, and aggregate supply will ___.
Increase, increase
Increased prices of gasoline causes the demand for tires to shift ___?
Left. Gas and tires are complementary
Market: Wheat
Graph the change in supply and/or demand if there is a drought across farms that grow wheat
*make sure to label your graph*
Supply shift left / decrease in supply
What is the definition of aggregate?
A collection of units treated as one
If workers across the economy negotiate higher wages, what happens to SRAS?
Shift left
Higher production costs reduce output level
If there is a significant decrease in government spending, what will happen to aggregate demand?
AD = C+I+G+Xn
Market: "shackets"
Graph the change in supply and/or demand if Mr Gurney posts a viral Tiktok and increases the popularity of the shacket
*make sure to label your graph*
Demand shift right / increase in demand
If a country imposes tariffs on its imports, does this affect aggregate supply or demand?
Demand, Tariffs affect net exports which is a determinant of aggregate demand
If nominal wages are “sticky” in the short run, how does this explain the upward slope of SRAS?
Since wages do not adjust quickly, higher output prices increase profit, therefore firms produce more
Interest rates fall due to central bank policy. What components of aggregate demand does this effect?
Investment will decrease and consumption will increase (borrowing is cheaper)
Market: Chocolate ice cream
Graph the change in supply and/or demand if a recent study provides numerous health benefits for consuming chocolate ice cream, but farmers across the nation decrease production of cacao plants
*make sure to label your graph*
Demand shift right AND supply shift left
Assume the economy is experiencing both rising unemployment and rising inflation. What is this called and what curve on the graph does it affect?
Stagflation, SRAS shifts left