1. Explain how and why each of the following factors would influence current aggregate demand in the US

a. increased fear of recession

b. increased fear of inflation

c. rapid growth of real income in Canada and Western Europe

d. a reduction in the real interest rate

e. a higher price level

2. .

Indicate how each of the following would influence U.S. aggregate supply in the short run:

a. an increase in real wage rates

b. a severe freeze that destroys half the orange trees in Florida

c. an increase in the expected rate of inflation in the future

d. an increase in the world price of oil, a major import

e. abundant rainfall during the growing season in agricultural states

4. When an economy dips into a recession, consumers will of-ten be relatively pessimistic about the future for an extended period of time. How will this pessimism affect the speed and strength of the recovery? Feel free to use the data of Exhibit 2 in your response to this question.

7. During 2015, there was a substantial increase in stock prices and a reduction in the world price of crude oil. What impact would these two changes have on aggregate demand and ag-gregate supply in the United States? Use the AD-AS model to indicate the expected impact of these changes on output and the price level

10. Suppose that an unexpectedly rapid growth in real income abroad leads to a sharp increase in the demand for U.S. exports. What impact will this change have on the price * level, output, and employment in the short run in the United States? In the long run?