Aggregate Demand and Supply Assignment

1. Show the equations for the AD, AS and LRAS curves; what determines their slopes?

2. Show how a price shock affectsthe Fed inflation target. Show how the Fed can respond to regain its target.

3. Show how technological advances affect the Fed inflation target. Show how the Fed can respond to regain its target.

4. Show how a tax increase affects the Fed inflation target. Show how the Fed can respond to regain its target.

5. Show and explain how increasing the minimum wage from $10 to $15 per hour could be inflationary.

6. Explain why output stabilization policies are more likely to be conducted with monetary rather than fiscal policies.