AD - AS: Aggregate Demand Aggregate Supply Model - Extra Credit 1. Suppose the government sharply increases the minimum wage, raising the wages of many workers. What is the short-run effect of this shock on the aggregate price level and on aggregate output? a. Which curve shifts: AD or SRAS? b. Does it shift to the left or the right? c. What happens to aggregate price level? d. What happens to aggregate output? 2. Suppose that solar energy firms launch a major program of investment spending. What is the short-run effect of this shock on the aggregate price level and on aggregate output? a. Which curve shifts: AD or SRAS? b. Does it shift to the left or the right? c. What happens to aggregate price level? d. What happens to aggregate output? 3. Suppose that Congress cuts income taxes. What is the short-run effect of this on the aggregate price level and on aggregate output? a. Which curve shifts: AD or SRAS? b. Does it shift to the left or the right? c. What happens to aggregate price level? d. What happens to aggregate output? 4. Suppose that severe weather destroys crops around the world. What is the short-run effect of this shock on the aggregate price level and on aggregate output? a. Which curve shifts: AD or SRAS? b. Does it shift to the left or the right? c. What happens to aggregate price level? d. What happens to aggregate output