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Part 4: Complete the following chart by stating whether each measure increases or decreases: Shift Price...

Part 4: Complete the following chart by stating whether each measure increases or decreases:

Shift

Price Level

Real GDP

Unemployment Rate

Aggregate Demand increases

Aggregate Demand decreases

Aggregate Supply increases

Aggregate Supply decreases
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Answer #1

Answer : Aggregate demand increases : When aggregate demand increase then the aggregate demand curve shift to rightward. As a result, the price level increase and real GDP increase . Due to increase in real GDP the employment level increase which decrease the unemployment rate.

Aggregate demand decreases : When aggregate demand decrease then the aggregate demand curve shift to leftward. As a result, the price level decrease and real GDP decrease . Due to decrease in real GDP the employment level decrease which increase the unemployment rate.

Aggregate supply increases : When aggregate supply increase then the aggregate supply curve shift to rightward. As a result, the price level decrease and real GDP increase . Due to increase in real GDP the employment level increase which decrease the unemployment rate.

Aggregate supply decreases : When aggregate supply decrease then the aggregate supply curve shift to leftward. As a result, the price level increase and real GDP decrease . Due to decrease in real GDP the employment level decrease which increase the unemployment rate.

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