Economics- Exogenous Demand/Supply Shocks

I need to know which way aggregate demand (AD) shifts according to scenarios and why:
1) Economic booms in both Japan and Europe result in massive increases in orders for exported goods from the United States.
2) As part of its countercylical policy, the government both reduces taxes and increases transfer payments.
3) While the U.S. was in the midst of the Great Depression, a foreign power attacked, Congress declared war and more than 1,000,000 soliders were drafted in the first year while defnese spending was increased several times over.
4) The balance the budget, the federal government cuts Social Security payments by 10% and federal aid to education by 20%.

Supply issues (SRAS- which way does it shift and why)
1) New environmental standards raise the average cost of autos and trucks 5%.
2) Fine weather results in the highest corn and wheat yields in 40 years.
3) Because of decreased international tension, the government sells off thousands of army-surplus Jeeps and trucks at prices that are far less than the market price for their commerical counterparts.
4) An enemy power sets up a blockade of the sea lanes leading to a country, and most ships refuse to deliver cargo through blockade.

Thank you :)

  1. 👍 0
  2. 👎 0
  3. 👁 133
asked by Kelly

Respond to this Question

First Name

Your Response

Similar Questions

  1. Economics

    Determine whether each of the following would cause a shift in the aggregate demand curve, the aggregate supply curve, neither, or both. Which curve shifts, and in which direction? What happens to aggregate output and the price

    asked by Jeffrey on September 6, 2006
  2. economics

    Hello, I am currently busy writing an essay and run against a wall: If government decreases the corporate tax rate, what would be the short-run and long-run effect on the aggregate supply, aggregate demand and Long-run aggregate

    asked by Tom on September 9, 2014
  3. Econ

    How does the aggregate goods and services market differ from the regular (microeconomic) supply and demand market? In other words, how does aggregate demand and aggregate demand differ from normal supply and demand? Address the

    asked by Lisa on March 12, 2012
  4. Economics

    Concern about international crisis has caused consumers to save their money and postpone big purchases. What is the effect on aggregate demand and aggregate supply? A. No change B. Aggregate supply will decrease, raising the price

    asked by Codey on May 31, 2011
  5. Economics

    Suppose you have an inflationary gap how would a classical economist, for example, explain how how to get rid of that gap? My Answer: I would think that the goods market would be affected. So, prices go down, aggregate supply

    asked by Sarah on April 16, 2007
  6. economics

    Using an aggregate demand and supply diagram, explain how each of the following scenarios affects the equilibrium price level and aggregate output. Consider first the short-run, then the long-run equilibrium for each scenario. a)

    asked by Mandy on July 15, 2014
  7. Economics

    Would a reason the aggregate demand curve shifts downward be because of: A lower price level decreases consumption?

    asked by Rach on March 12, 2010
  8. economics

    some study guide questions i am stumped on 1 uncertainty about the future is likely to a increase current spending b either increase or decrease c decrease current spending d no impact on current spending think it's d 2 as the

    asked by samuel on April 15, 2011
  9. Economics

    One supply-side measure introduced by the Reagan administration was a cut in income tax rates. Use an aggregate demand/aggregate supply diagram to show what effect was intended. What might happen if such a tax cut also shifted the

    asked by Anonymous on February 4, 2013
  10. economics

    On the aggregate demand graph if aggregate demand increases does the bar move left or right?

    asked by Tabby on December 16, 2007
  11. economics

    On the aggregate demand graph if aggregate demand increases does the bar move left or right?

    asked by Tabby on December 16, 2007

More Similar Questions