Assume that aggregate supply meets aggregate demand in the upward ...

[nmorano1]

Assume that aggregate supply meets aggregate demand in the upward sloping portion of the AS curve. For each of the following, graph the change in aggregate supply and/or aggregate demand, and state the effect on prices and output. 1. The demand for U.S. exports increases. 2. Taxes increase. 3. Businesses become less optimistic about the future. 4. The labor force increases. 5. Costs of production increase.
 
  What will be an ideal response?

Question 2

A nation must have an absolute advantage in order to have a comparative advantage in producing a good or service.
 
  Indicate whether the statement is true or false

[tanna.moeller]

Answer to Question 1

1. Aggregate demand increases; prices and output rise.
2. Aggregate demand decreases; prices and output fall.
3. Aggregate demand decreases; prices and output fall.
4. Aggregate supply increases (shifts rightward); prices fall and output rises.
5. Aggregate demand increases (shifts leftward); prices rise and output falls.

Answer to Question 2

FALSE