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Assume that:
(a) the price level is flexible upward and downward and
(b) the economy is currently operating at its full-employment output.
How will each of the following changes in AD and / or AS affect the equilibrium price level and real output (GDP or Q) in the short run? (Other things constant, table your answers using +,-,=)
a. An increase in aggregate demand.
b. A decrease in aggregate supply, with no change in aggregate demand.
c. Equal increases in aggregate demand and aggregate supply.
d. A decrease in aggregate demand.
e. An increase in aggregate demand that exceeds an increase in aggregate supply.
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