Question

6. Give 5 examples that can shift the AD to the right 7. Give 5 examples that can shift the AD to the left

8. Give 5 examples that can shift the SRAS & LRAS to the right

9. Give 5 examples that can shift the SRAS & LRAS to the left

Answer 1

6) AD will shifts to the right when demand will be increased. Examples are

a) Income is increased. assume the good is normal good

b) The price of the substitute good increase

c) The price of complementary goods falls

d) An advertisement that the product can increase the welfare. For an example, the advertisement that consuming milk can increase the health benefit of the child so the demand for milk will be increased.

e) seasonal factors. For an example in the time of winter demand for woolen cloths increase.

AD curve shifts to the left when the demand decrease. examples are

a) Income is decreased consider goods are normal

b) Decrease the popularity of a brand.

c)the price of substitute goods decrease.

d) The price of complementary goods increase.

e) seasonal factor. An example at summer demand for warm cloth decreases.

8) SRAS and LRAS shifts to the right when supply increases. SRAS shifts when supply changes in the short run. LRAS shifts when supply changes permanently. Examples are

a) improvement in technology

b) Decrease in input prices

c) a change in expectation that increases current supply.

d) Increase in the number of sellers.

e) good climate. For an example, a good amount of rain can raise more crops.

9) SRAS and LRAS shifts to the left when supply decresaes. Examples are

a) A decrease in technology that is by using backdated technology supply can decrease.

b) Increase input price which makes it costly to produce goods

c) Change in an expectation that decrease current supply

d) Decrease in the number of sellers.

e) natural calamity such as flood destroys half of the crop of a country. then the supply of that crop will be decreased.