2. (LO 3, 4) Starting from full-employment equilibrium, indicate whether each of the following factors will affect aggregate demand (AD) or aggregate supply (AS) and whether the effect would be an increase or a decrease.

Then, indicate what will happen to the price level and the level of real GDP and what type of equilibrium will result.

a) A decrease in interest rates:

Price level: Real GDP:

Type of equilibrium:

b) An improvement in technology:

Price level: Real GDP:

Type of equilibrium:

c) An increase in the exchange rate:

Price level: Real GDP:

Type of equilibrium:

d) A decrease in government spending:
Price level: Real GDP:
Type of equilibrium:

e) An increase in the money supply:
Price level: Real GDP:
Type of equilibrium:

f) An increase in the nominal wage rate:
Price level: Real GDP:
Type of equilibrium: