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Name: _______________________ Date: _______ Per: ________

Aggregate Equilibrium
Directions: Read each situation and decide how it will affect the market indicated on the graph.
The first economic analysis has been done for you.

NIPA reports that US government expenditures are up 20%


Due to nationwide highway redevelopment program. R
I
C
A. Label Aggregate Demand and Aggregate Supply curves E AD1
AD AS
B. Label original equilibrium point; label it “A”
C. Decide if headline will cause a shift in supply or
demand: Increase Aggregate Demand B
D. Draw a new curve representing the change in either
Supply or Demand; label it “AS1” or “AD1”
E. Label new equilibrium point; label it “B”
F. Decide what determinant (reason for change):
G. Determine effect on equilibrium price: Increase 
H. Determine Effect on equilibrium Real GDP: Increase  0
Q1
QUANTITY

Real GDP

1. Increase in labor productivity due to advancement in


Computer technology.

A. Label Aggregate Demand and Supply Curves


B. Label original equilibrium point “A”
C. Shift in supply or demand: ___________________
D. Label new curve “S1” or “D1”
E. Label new equilibrium point “B”
F. Determinant: ________________________
G. Effect on Aggregate equilibrium Price:_________________
H. Effect on Real GDP: __________________ 0

REAL GDP

2. Increase in the price of crude oil used by nearly all US


manufacturers.

A. Label Aggregate Demand and Supply Curves


B. Label original equilibrium point “A”
C. Shift in supply or demand: ___________________
D. Label new curve “S1” or “D1”
E. Label new equilibrium point “B”
F. Determinant: ________________________
G. Effect on Aggregateequilibrium Price:_________________
H. Effect on Real GDP: __________________ 0

REAL GDP
3. New polls show consumer confidence in the economy;
US malls reporting record numbers of shoppers.

A. Label Aggregate Demand and Supply Curves


B. Label original equilibrium point “A”
C. Shift in supply or demand: ___________________
D. Label new curve “S1” or “D1”
E. Label new equilibrium point “B”
F. Determinant: ________________________
G. Effect on Aggregate equilibrium Price:____________________
H. Effect on Real GDP: __________________ 0

REAL GDP

4. Businesses worried about costs decrease non-residential


Equipment investment in the third quarter of 2014.

A. Label Aggregate Demand and Supply Curves


B. Label original equilibrium point “A”
C. Shift in supply or demand: ___________________
D. Label new curve “S1” or “D1”
E. Label new equilibrium point “B”
F. Determinant: ________________________
G. Effect on Aggregate equilibrium Price:____________________
H. Effect on Real GDP: __________________ 0

REAL GDP

5. Obamacare requires all Americans to


purchase health care plans.

A. Label Aggregate Demand and Supply Curves


B. Label original equilibrium point “A”
C. Shift in supply or demand: ___________________
D. Label new curve “S1” or “D1”
E. Label new equilibrium point “B”
F. Determinant: ________________________
G. Effect on Aggregate equilibrium Price:____________________
H. Effect on Real GDP: __________________ 0

REAL GDP