Using short run aggregate supply and aggregate demand analysis, discuss how the following will affect the aggregate level of output and the price level in the economy. Use a SRAS curve (not the LRAS). You need to determine whether the ADorSRAS curve will shift, in which direction it will shift, and how this will affect aggregate output and the price level.

a. An increase in labor productivity in the economy, other things unchanged.

b. When the central bank (the Fed) reduces the quantity of money in the economy, other things unchanged.