Chapter 19 - (Aggregate Demand and Supply Determine whether...

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Chapter 19 15. (Aggregate Demand and Supply) Determine whether each of the following would cause a shift of the aggregate demand curve, a shift of the aggregate supply curve, neither, or both. Which curves shifts, and in which direction? What happens to aggregate output and the price level in each case? a. The price level changes : this would affect both aggregated demand and supply curve. A fall in the price levels raises the overall quantity of goods demanded. An increase in the expected price level reduces the quantity of goods and services supplied and shift the short-run aggregate supply curve to the left. A decrease in the expected price level raises the quantity of goods and services supplied and shift the short-run aggregate supply curve to the right. b. Consumers confidence declines: A decrease in consumer confidence causes a decrease of the aggregate demand curve, a leftward shift. c. The supply of resources increases: This will affect the demand curve because more products can be produced than what are being demanded.
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