02. Explain whether each of the following events will increase, decrease or have no effect on long-run aggregate supply.

A) Malaysia experiences a wave of immigration.

B) Intel invents a new and more powerful computer chip.

C) Tenaga Nasional Berhad (TNB) invests in new electricity transmission technology.

D) A severe flood damages factories in Pahang.

05. For each of the three theories for the upward slope of the short-run aggregate-supply curve, carefully explain the following:

A) How the economy recovers from a recession and returns to its long-run equilibrium without any policy intervention.

B) What determines the speed of that recovery.

06. For each of the following events, explain the short-run and long-run effects on output and the price level, assuming policymakers take no action.

A) The stock market declines sharply, reducing consumers' wealth.

B) The federal governement increases spending on national defense.

C) A technological improvement raises productivity.

D) A recession overseas causes foreigners to buy fewer Malaysian goods.