Answer to Question #13623 in Macroeconomics for Rachel Nkoshi

Question #13623
what effects would each of the folowing have on aggregate demand or aggregate supply? 1. A widespread of depression on the part of the consumer 2. An U$ increase in the excise tax on a pack of cigarettes 3. A reduction in the interest rate at each price level 4. The expectaion of rapid inflation
Expert's answer
1. A widespread of depression on the part of the consumer Decrease of aggregate supply
2. An U$ increase in the excise tax on a pack of cigarettes Decrease of aggregate demand
3. A reduction in the interest rate at each price level – Increase of aggregate supply
4. The expectation of rapid inflation – Increase of aggregate demand

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