Questions:
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).
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.
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