) Explain whether each of the following events shifts the short-run aggregate supply curve, the aggregate...

) Explain whether each of the following events shifts the short-run aggregate supply curve, the aggregate demand curve, both, or neither. For each event that does shift a curve draw a diagram to illustrate the effect on the economy (you don’t have to send me the graphs, but you should draw them on scratch paper for practice).

Households decide to save a larger share of their income.

Florida orange groves suffer a prolonged period of below-freezing temperatures.

Increased job opportunities overseas cause many people to leave the country.

Expert Solution

1.When people save more they automatically spend less.When they spend less they demand less.The demand curve shifts to the left.

2.The production falls due to adverse conditions.The supply of oranges fall.The supply curve shifts to the left.

3.As people move out of the country the supply of labour falls.Therefore,the production falls and aggregate supply shifts to the left.Because of lower population than before,the demand also falls.Aggregate demand shifts to the left.

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Rahul Sunny answered 2 years ago

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