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

a. Canada experiences a wave of immigration.

b. Intel invents a new and more powerful computer chip.

c. A severe hurricane damages factories along the east coast.

2. Suppose that consumer spending initially rises by $5 billion for every 1 percent rise in household wealth and that investment spending initially rises by $20 billion for every 1 percentage point fall in the real interest rate. Also assume that the economy's multiplier is four(4). If household wealth falls by 5 percent because of declining house values, and the real interest rate falls by two percentage points, in what direction and by how much will the aggregate demand curve initially shift at each price level? In what direction and by how much will it eventually shift?

3. In the following table, you are given the following parameters for the economy of Atris:

C = 100 + 0.85Y

I = 300

G = 150

X = 60

IM = 10 + 0.05Y

A) What is the value of expenditures equilibrium?

B) What is the value of total leakages and injections at expenditures equilibrium?

C) Suppose autonomous expenditure increases by $25. What is the new value of expenditure equilibrium?