Jefferson College Aggregate Demand Supply and LRAS Macroeconomics Discussion

Use the Aggregate Demand and Aggregate Supply model to analyze the impacts of the following events, show this on a graph for each situation.

1) Steelworkers go on strike and produce less steel.

2) US Senators read about the glories of the Internet and so demand for high tech government purchases increases.

3) A series of Investment Banks such as Lehman Bros and Bear Sterns go bankrupt,

4) Wars in the Middle East reduce the supply of oil.

5) Consumers fear they may lose their jobs and businesses fear they may lose their customers.

6) Name a factor that could cause a shift of Aggregate Demand. What impact is expected?

7) Name a factor that could cause a shift of Aggregate Supply. What impact is expected?

Your answers should be specific. For example, bad weather could cause a shift in AS. Bad weather could cause a poor harvest and a decrease in the growth of GDP, that is, a shift to the left of the LRAS. Such a shift would result in lower GDP growth, lower inflation and increased unemployment.

watch this before answering the questions

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