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    Effects on AD and AS curves

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    19. Evaluate the effect of the following on the AD curve, AS curve, equilibrium price level and equilibrium output in the U.S.
    (a) The U.S. imposes tariffs on foreign goods to promote domestic industry. In retaliation, foreign countries impose tariffs on U.S. goods.

    (b) Congress decides to decrease personal income taxes, and to compensate for the lost revenue they decrease business subsidies.

    (c) A technology boom improves technology across industries, improving their productivity.

    (d) U.S. oil companies discover new large oil reserves in the U.S. The international price of oil falls
    (e) Consumers expect a recession

    (use left, right, or NC for No Change for supply and demand) (use up , down, or indeterminate for quantity and price)






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    Solution Preview

    Here are the reasons for the shifts in supply and demand. Note that once you know the changes in the curve, equilibrium price and quantity is taken from the intersection of the new supply or demand curves. Because the supply curve slopes upward and the demand curve slopes downward, their shifts affect the ...

    Solution Summary

    shifts in supply and demand and effects on AD + AS Curves