Determine the expected effects on equilibrium price level

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What effects would each of the following have on aggregate demand or aggregate supply? In each case use a diagram in your notes to determine the expected effects on the equilibrium price level (P) and level of real output (Q). For each of the economic structures described in a-j, give the effects on P and Q. (ie + or -). (Assume that all other things remain constant.) a. A widespread fear of depression on the part of consumers. b. A $2 increase in the excise tax on a pack of cigarettes. c. A reduction in interest rates at each price level. d. A major increase in Federal spending for health care. e. The expectation of rapid inflation. f. The complete disintegration of OPEC, causing oil prices to fall by one-half. g. A 10 percent reduction in personal income tax rates. h. A sizable increase in labor productivity (with no change in nominal wages). i. A 12 percent increase in nominal wages (with no change in productivity). j. Depreciation in the international value of the dollar.

Reference no: EM131165335

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