Question 1. For each situation described the scenario in few lines and make sure to answer i.e. (1) Demand-Pull or Cost-Push Inflation; (2) Increase or decrease in AD/AS; (3) Shifting of AD/AS.

Q. No.1-A)In his 2020 Cabinet address Prime Minister Imran Khan Calls for an increase in the Pakistan military presence across the globe to combat what he deemed a threat to the sovereignty of the Pakistani economy and CPEC.

Answer 1-A:

(1) Demand-Pull or Cost-Push Inflation;

(2) Increase or decrease in AD/AS;

(3) Shifting of AD/AS.

Q. No.1-B)The Saudi Arabia disrupts oil production and supplies worldwide. This causes OPEC and commodities speculators to raise crude oil prices to record levels.

Answer 1-B:

(1) Demand-Pull or Cost-Push Inflation;

(2) Increase or decrease in AD/AS;

(3) Shifting of AD/AS.

Q. No.1-C)The federal government raises the minimum wage to Rs. 25,000 per month.

Answer 1-C:

(1) Demand-Pull or Cost-Push Inflation;

(2) Increase or decrease in AD/AS;

(3) Shifting of AD/AS.

Question 2. For each of the graphs below, identify the starting equilibrium PL and Y. Then show the shift given for each graph and identify the new equilibrium PL and Y. Indicate the resulting change in price level, unemployment, and real GDP by circling the up arrow for an increase or the down arrow for a decrease.