Question

Evaluate the effect of the following situations on the AD curve, AS curve, equilibrium price level, and equilibrium output in the U.S.

(a) The U.S. imposes tariffs on foreign goods to promote domestic industry. In retaliation, foreign countries impose tariffs on U.S. goods.

(b) Congress decides to decrease personal income taxes, and to compensate for the lost revenue they decrease business subsidies.

(c) A technology boom improves technology across industries, improving their productivity.

(d) U.S. oil companies discover new large oil reserves in the U.S. The international price of oil falls.

(e) Consumers expect a recession

(For supply and demand use shift left, right, or NC for No Change) Supply Demand example: right NC

a. _______ _____________

b. _______ _____________

c. _______ _____________

d. _______ _____________

e. _______ _____________

(For equilibrium quantity and price use up , down, or ? for indeterminate) Quantity Price Ex: up ?

a. _______ _____________

b. _______ _____________

c. _______ _____________

d. _______ _____________

e. _______ _____________

Answer 1