For this Dropbox assignment you will review the various components that affect aggregate demand and supply.  You will evaluate them from a graphical, short- and long-term perspective.  Each component of aggregate demand and supply can be positively or adversely affected by policies that are driven by the government or the Federal Reserve.  Shifts in the aggregate demand and supply are driven by multiple factors that cause either a decrease or increase in either one of these curves.

Upon completion of this assignment, you should be able to:

• Evaluate and synthesize the managerial impact of the variables that affect aggregate demand and aggregate supply.

Resources

• Textbook: Economics for Managers

• Video: “Aggregate Demand/Aggregate Supply Macro Model”

Background Information

Aggregate demand and aggregate supply have a significant impact on the macroeconomy.  There are various policies, including monetary and fiscal measures, that are implemented by the government.  There are political and economic issues that affect the decisions made by policymakers.  Policymakers use economic indicators to assist in their decisions that have a far-reaching impact on consumption and production.

Instructions

1. Review Chapter 14, “The Aggregate Model of the Macro Economy” in the ECON-511 textbook, Economics for Managers.

2. Watch the video, “Aggregate Demand/Aggregate Supply Macro Model.”

3. For your Dropbox submission, explain whether each of the following statements is true or false, justifying your response.

a. The short-run aggregate supply (SAS) curve slopes upward because households spend more as their incomes increase. 

b. The long-run aggregate supply curve can never shift. 

c. Either a decrease in the nominal money supply by the Federal Reserve, all else held constant, or an increase in the price level, all else held constant, will shift the aggregate demand (AD) curve to the left. 

d. The Keynesian portion of the short-run aggregate supply (SAS) curve would be relevant during a recessionary situation.

e. Stagflation occurs when the aggregate demand (AD) curve shifts out on the upward sloping portion of the short-run aggregate supply (SAS) curve.

4. Your submission should be a minimum of 100 words for each factor.

5. When you have completed your assignment, save a copy for yourself and submit a copy to your instructor using the Dropbox by the end of the workshop.