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Question 1

Suppose that there is a

**positive**aggregate demand shock. Which graph most accurately shows how this would affect the aggregate demand - aggregate supply model? Note that the new curve is shown in gray. AD curve shifts right:

Hint

Box 1: Select the best answer

Question 2

Suppose that there is a

**negative**aggregate demand shock. Which graph most accurately shows how this would affect aggregate demand - aggregate supply model. Note that the new curve is shown in gray. AD curve shifts left:

Hint

Box 1: Select the best answer

Question 3

Suppose that we observe increase in government spending. Which graph most accurately shows how this would affect aggregate demand - aggregate supply model. Note that the new curve is shown in gray.

AD curve shifts right:

Hint

Box 1: Select the best answer

Question 4

Suppose that we observe dollar appreciation. Which graph most accurately shows how this would affect the aggregate demand - aggregate supply model? Note that the new curve is shown in gray.

AD curve shifts left:

Hint

Box 1: Select the best answer