Question One Aggregate Supply and Aggregate Demand Model (AS-AD Model) is used to analyse the correlations and interactions between the quantity of real GDP and the price level. Use your understanding about the model to answer the following questions: a) b) C) If potential GDP increases. what happens to aggregate supply? Does the LRAS curve shift or is there a movement along the LRAS curve? Does the SEAS curve shift or is there a movement along the SRAS crave? (4 Marks) If the money wage rate rises and potential GDP remains the same- does the LRAS curve or the SRAS curve shift or is there a movement along the LRAS curve or the SRAS curve? (3 Marks) What does the aggregate demand curve show? What factors change and what factors remain the same when there is a movement along the aggregate demand curve? (3 Marks) Why does the aggregate demand curve slope dotmward? Explain the economic logic behind it. (6 Marks) How do changes in expectations. scal policy and monetary policy. and the world economy change aggregate demand and the aggregate demand cmye? (4 Marks) Describe three types of short-run macroeconomic equilibrium. (3 Marks) How do uctuations in aggregate demand and short-rim aggregate supply bring uctuations in real GDP around potential GDP? {3 Ma rks)