Using graphical illustration of AS-AD framework, show the effects of following events on real
output and price level in the economy.
• A wave of immigration increases the labor force.
• An earthquake destroys some of the capital stock.
• A technological advance improves the production.
• The government raises taxes by $100 billion.
• Government announces an interest rate cut to encourage business investment.

Answer rating: 100% (QA)

AD is a downward sloping curve whereas AS is an upward sloping curve An increase in the labor force ... View the full answer