The questions are listed below

AD/AS Teams Using an aggregate demand-aggregate supply diagram, illustrate the following events in U.S. history. Label any shifts in the AD or AS lines by marking the starting price level and output level and final price level and output level. For example: AS 1929-1933. During this time, the U.S. Federal Reserve Bank allowed the money supply to fall by 40%. This meant less money in circula- Price tion, fewer loans and higher interest Level rates. (Note: some economists P believe this was the major cause of P. the Depression.) U.S. Economic Real Output History 1. 1932. In this year when the Price with unemployment rate reached 24%, Level President Hoover raised excise and AD/AS income taxes. Real Output 2. 1939-1942. Federal government spending on defense increased from Price $1.2 billion to $49.4 billion, Unem- Level ployment fell to 1.9% in 1943. Real Output 3. 1961-1965. President Kennedy proposed investment tax credits for Price business and tax cuts for consumers Level in order to offset the economic slowdown. By 1965, unemployment fell to 4.8% continued Real Output4. 1965-1967. With the economy already at a high-employment level, the Federal government increased Price military spending for the Vietnam Level War from $49.4 billion to $71.5 billion. There was no offsetting tax hike. Inflation increased. Real Output 5. 1974-1978. With inflation al- ready increasing, oil prices doubled in 1974, and then doubled again in 1978. The costs of production for Price all firms rose and consumers had Level less income for other purchases. Real Output 6. 1981-1984. The Reagan adminis- tration cut business and personal income taxes. Defense spending rose, but most non-defense spend- Price Level ing fell. Real Output 7. 1991-1993. The Persian Gulf War caused a temporary increase in oil prices. Consumer confidence Price fell. Government spending in- Level creased only slightly during the war because most equipment came from existing inventories. European economies suffered severe recession and therefore purchased fewer U.S. goods. Real Output