Determine the effect on aggregate demand/ Short Run Agrregate supply of each of the following

events. Explain whether it represents a movement along the aggregate demand/ Short run Aggregate

supply curve (up or down) or a shift of the curve (leftward or rightward).

a) News of a worse-than-expected job market next year

b) A rise in the consumer price index (CPI) leads producers to increase output.

c) A rise in legally mandated retirement benefits paid to workers leads producers to reduce

output.

d) As a result of an increase in the value of the dollar in relation to other currencies, American

producers now pay less in dollar terms for foreign steel, a major commodity used in production.

e) An increase in the quantity of money by the Federal Reserve increases the quantity of money

that people wish to lend, lowering interest rates.

f) Greater union activity leads to higher nominal wages.

g) A fall in the aggregate price level increases the purchasing power of households' and firms' money holdings. As a result, they borrow less and lend more