Question

Identify the change in shifters in the graph (if any) as either an IRAP or CIGX for the LRAS, Aggregate Demand, and Short-Run Aggregate Supply.

29AS SRASRAS 1. Before: A Or sl eguibrd 2. The effect on production when a 5% excise tax is placed on several 2. Shifter TRAP/SRAS resources. 3. After: B Mow ment alons He ne o naf beck 4. Gap: Recessionar Exeait GPP ADT JRAS AS 1. Before: A 2. Shifter 3. A large purchase of U.S. wheat by Russia 3. After: B 4. Gap: RAS AS 1. Before: A 2. Shifter 4. A cut in Federal spending for Health Care 3. After: B AD 4. Gap: ARAS 1. Before: A AS 2. Shifter IRAP The complete disintegration of PEC causing oil prices to fall Tacun S 3. After: B ADT 4. Gap: Intlatiirers

Need help with 3 and 4, please.

Answer 1

3) Shift in the Aggregate demand curve to the right and short run supply curve to the right.

Because when the russia purchase large quantity of wheat by U.S , it will increase the money supply in the U.S and thus more supply of money encourage more demand at each price level and to meet the requirements of wheat , the U.S increase its supply and thus sras curve shifts to the right.

4) Shift in the aggregate demand curve to the left and sras curve to the left.

Because when the Fed cuts spending for health care , the supply of money decrease in the economy as the result aggregate demand fallss and due to decrease in money supply , interest rates increases and thus investment falls and therefore suppy will reduce and thus short run aggregate supply curve shift to the left.