Question

1. What would happen to the aggregate supply curve if worker productivity increased as a result...

1. What would happen to the aggregate supply curve if worker productivity increased as a result of increased training and education?

   2. Which of the following could lead to inflation?
        An increase in aggregate supply
        An increase in aggregate demand
        A decrease in aggregate supply
        A decrease in aggregate demand
   3. If the price level rises and the money wage rate stays the same, what effect will this have upon labor demanded and production? .
    4. Explain the effect a rise in price levels would have upon the demand for money and nominal interest rates.
5. Given the same scenario as #6, what will the effect be on real GDP (Explain)?
   6. What are the 2 chief causes of Cost-Push inflation?
   7. Explain in detail why the Great Depression was so bad as compared to the Great Recession of 2008-2009 .

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Answer #1

1. THE AGGREGATE SUPPLY CURVE WOULD INCREASE AS A RESULT OF INCREASED WORKER PRODUCTIVITY RESULTING FROM INCREASED TRAINING AND EDUCATION.

It means AS curve would shift rightward.

2. An increase in aggregate demand and A decrease in aggregate supply both could lead to inflation.

Ans is both B and C.

3.  If the price level rises and the money wage rate stays the same, then THE QUANTITY OF LABOR DEMANDED AS WELL AS PRODUCTIVITY WILL BOTH INCREASE.

4. THE DEMAND FOR MONEY WILL INCREASE AND THE NOMINAL INTEREST RATE WILL ALSO INCREASE.

5. FACED WITH HIGHER INTEREST RATES, BUSINESSES AND PEOPLE DELAY PLANS TO PURCHASE NEW CAPITAL AND CONSUMER DURABLE GOODS AND SO CUT BACK SPENDING. THIS CAUSES A REDUCTION IN THE DEMAND OF REAL GDP.

**First 5 questions are completely answered, please post the other questions separately**

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