Question: 3. ( /10) Economic Growth (Topic 3.7) a. Explain how the aggregate demand and aggregate supply change with decrease in interest rates in the short-run.

3. ( /10) Economic Growth (Topic 3.7) a. Explain how the aggregate demand and aggregate supply change with decrease in interest rates in the short-run. Explain why each curve shifts. ( (5) b. Define capital stock. How does the aggregate supply change in the long-run with an increase in investment spending? Explain why an increase in consumer spending would not have the same effect in the long-run. ( /5)

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