Question 9 Following on from your answers to 1 through 8: 1 pts C) The rightward shift from to results in a rise in the inflation rate back to its original level of TO and output returns to its original level of Y N O Continuing from the downward shift of the MP curve from to , as the interest rate decreases from 'il to t SR, the AE curve shifts upwards until planned aggregate expenditures equals YSR. This shift is brought about by an increase in aggregate investment and an increase in exports that occurs due to a depreciation in the Australian dollar. C) The downward shift in the WS curve causes the real wage to fall. This reduction in the real wage is reflected in movements along the job creation curve. Due to the decrease in the real wage, firms choose to hire more workers. This justifies the return to Y N at the higher inflation rate that was brought about by the joint movements in the AD and AS curves. C) Continuing from the upward shift of the MP curve from to as the interest rate increases from 'il to t SR, the AE curve shifts downwards until planned aggregate expenditures equals YSR. This shift is brought about by a decrease in aggregate investment and a decrease in exports that occurs due to an appreciation in the Australian dollar.