Assignment_5 - 3.1 Illustrate each of the following...

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3.1 Illustrate each of the following situations with a graph showing AS and AD curves, and explain what happens to the equilibrium values of the price level and aggregate output: a. A decrease in G with the money supply held constant by the Fed b. A decrease in the price of oil with no change in government spending c. An increase in Z with no change in government spending d. An increase in the price of oil and a decrease in G 5.4 Using AS and AD curves to illustrate, describe the effects of the following events on the price level and on equilibrium GDP in the long run assuming that input prices fully adjust to output prices after some lag: a. An increase occurs in the money supply above potential GDP b. GDP is above potential GDP, and a decrease in government spending and in the money supply occurs c. Starting with the economy at potential GDP, a war in the Middle East pushes up energy prices temporarily. The Fed expands the

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