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Changes in the Equilibrium Price Level and Output

For each situation described below, illustrate the change on the AD and AS graph and describe the effect on the equilibrium price level and real gross domestic product $($GDP$)$ by circling the correct symbol: uarr for increase, darr for decrease, or $-$ for unchanged

Business investment increases.

The government increases spending.

Consumers' confidence improves.

Net exports decrease.

$\backslash$table$[[$rice level:,uarr,darr,$-,,$Price level:,uarr,darr

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Price level:

$1$

$1$

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$1$Real GDP:t$1$

$\backslash$table$[[\backslash$table$[[3.$ New oil discoveries cause large$],[$decreases in energy prices.$]]],[\backslash$table$[[4.$ Consumer spending increases.$]]],[$Price level:$],[$Real GDP:$],[1]]$

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The equilibrium price and quantity in the economy will change when either the short$-$run aggregate supply $($SRAS$)$ or the aggregate demand $($AD$)$ curve shifts. The AD curve shifts when any of the components of AD change$-$consumption $($C$),$ investment $($I$),$ government spending $($G$),$ exports $($X$),$ or imports $($M$).$ The aggregate supply $($AS$)$ curve shifts when there are changes in the price of inputs $($e$.$g$.,$ nominal wages, oil prices$)$ or changes in productivity.

Changes in the Equilibrium Price Level and Output

For each situation described below, illustrate the change on the AD and AS graph and describe the effect on the equilibrium price level and real gross domestic product $($GDP$)$ by circling the correct symbol: uarr for increase, darr for decrease, or $-$ for unchanged

Business investment increases.

The government increases spending.

$\backslash$table$[[$Price level:,uarr,darr,$-,,$Price level:,uarr,darr