Q1. Give two reasons why the nation's aggregate demand (AD) curve is a downward-sloping function of the nation's price level. Q2. Explain what happens to the position of the nation's aggregate demand curve, the short- run level of equilibrium output, and the nation's price level if: A. The Federal Reserve sharply increases interest rates B. Congress enacts an income tax hike C. The U.S. dollar appreciates strongly against the yen and the euro D. Consumer confidence increases E. Stock prices decline 40 per cent F. Development of new software necessitates purchases of new computers Q3. Explain what happens to the position of the nation's aggregate supply curve, the short- run level of equilibrium output, and the nation's price level if: A. Congress increases the statutory minimum wage B. Oil prices drop to $12 per barrel C. A new computer virus disables forty million personal computers D. Development of new solar technologies cause energy prices to plummet E. Crop-restriction payments to farmers are eliminated F. Congress enacts a 25 per cent investment tax credit G. Productivity growth accelerates unexpectedly to 5 per cent per year Q4. Differentiate between a short-run equilibrium and a long-run equilibrium. In which situation a nation will experience recessionary gap" and inflationary gap