Use the AS/AD model to determine how each of these events will affect the economy.

First determine if the economy is initially to the "LEFT", "ON", or to the "RIGHT" of the LARS. Then determine which curve (S) is (are) shifting and in which direction (left or right).

Example: Initial situation: inflationary GAP; event: government increase taxes

LEFT; AD shifts left (please have a line per item and avoid any explanations)

A- Initial situation: unemployment rate is equal the natural rate of unemployment; event: an overall technology breakthrough

B- Initial situation: inflationary pressures; event: congress raises overall taxes.

C- initial situation: the economy is a recession; events: 1- consumer confidence deteriorates and 2- congress increases spending on infrastructure.

D- initial situation: underutilization of resources; event: the FED lowers interest rates.

E- initial situation: Inflationary gap; event: government decreases spending.

F- initial situation: positive GDP gap; events: 1- government spending decreases; and 2- a drought reduces production of farming products/goods.