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3. Suppose the government sharply increases the minimum wage.Think about the initial impact of this change. Visualize how this would be graphed using the ADAS

3. Suppose the government sharply increases the minimum wage.Think about the initial impact of this change. Visualize how this would be graphed using the ADAS model.

  1. Which curve shifts: AD or SRAS?
  2. Does it shift to the left or the right?
  3. What happens to aggregate price level?
  4. What happens to aggregate output?

4. Suppose that the government pressures the Federal Reserve to increase interest rates to fight off inflation. Visualize how this would be graphed using the ADAS model.

  1. Which curve shifts: AD or SRAS?
  2. Does it shift to the left or the right?
  3. What happens to aggregate price level?
  4. What happens to aggregate output?

5.Suppose that Congress cuts taxes and raises spending.Visualize how this would be graphed using the ADAS model.

  1. Which curve shifts: AD or SRAS?
  2. Does it shift to the left or the right?
  3. What happens to aggregate price level?
  4. What happens to aggregate output?

6.Suppose that the country experiences a number of natural disasters, hurricanes in the South East and fires in the West.Visualize how this would be graphed using the ADAS model.

  1. Which curve shifts: AD or SRAS?
  2. Does it shift to the left or the right?
  3. What happens to aggregate price level?
  4. What happens to aggregate output?

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