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1. Explain how the following changes in aggregate demand orshort-run aggregate supply, other things held unchanged, arelikely to affect the level of total output and the price level in theshort run.a. An increase in aggregate demandb. A decrease in aggregate demandc. An increase in short-run aggregate supplyd. A reduction in short-run aggregate supply
2. Explain why a change in one component of aggregate demand will causethe aggregate demand curve to shift by a multiple of the initial change.
3. Use the model of aggregate demand and short-run aggregatesupply to explain how each of the following would affect realGDP and the price level in the short run.a. An increase in government purchasesb. A reduction in nominal wagesc. A major improvement in technologyd. A reduction in net exports
