Quick recap! Aggregate Demand (AD) shifts with changes in spending (C, I, G, NX). Short-Run Aggregate Supply (SRAS) shifts with changes in production costs or productivity.

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Practice Question

Does the event primarily shift the AD curve or the SRAS curve?

Labels

• Left Label: Shifts AD
• Right Label: Shifts SRAS

Left Label Items

• The government cuts income taxes.
• Businesses become more optimistic about the future.
• A foreign country buys more of our exports.
• The central bank raises interest rates.

Right Label Items

• The price of oil suddenly doubles.
• A new technology increases worker productivity.
• The government increases the minimum wage.

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Practice Question

Sort these events based on how they shift the Aggregate Demand (AD) curve.

Labels

• First Box Label: Right Shift
• Second Box Label: Left Shift

First Box Items

• Consumer confidence
• Interest rate cut
• Export boom

Second Box Items

• Tax increase
• Govt spending cut
• Recession fear

Type

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Practice Question