5

Answer the following questions. Please rewrite the questions and write in complete sentences and paragraphs. Remember that economics is a science and that we are concerned with describing what, how, and why behaviors occur, therefore it should be detailed enough to clearly convey the economic concepts, using the appropriate terminology. You should apply the material from this module and chapter and not the internet. 1. Describe the wealth effect, the interest rate effect, and the foreign price effect. Discuss how these effects are connected? 2. During the spring of 2014 the Midwestern U.S., which has a large agricultural base, experiences above-average rainfall. Draw the AD/AS diagram, what is the effect on output, the price level, and employment? (This graph does not require data. Photos of your work or hand drawn graphs will have 10 points deducted. If you need a refresher in drawing a simple graph or the link below fails please go back to module 4.)