Explain for each event whether it changes short-run aggregate supply, long-run aggregate supply, aggregate demand, or some combination of them
What will be an ideal response?
The expansion in the world economy increases U.S. exports and increases aggregate demand. The expectation of higher profits in the future increases investment and increases aggregate demand. An increase in government expenditure on goods and services increases aggregate demand.
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Refer to the figure below. In response to gradually falling inflation, this economy will eventually move from its short-run equilibrium to its long-run equilibrium. Graphically, this would be seen as 
A. long-run aggregate supply shifting leftward B. Short-run aggregate supply shifting upward C. Short-run aggregate supply shifting downward D. Aggregate demand shifting leftward
Your friend has just received a new book he ordered and you want to borrow it. Your friend values reading the book at $10, while you are willing to pay a maximum amount of $15 to read it
a) What is the equilibrium outcome in this case? b) Will the outcome be any different if you own a book that your friend wants to read? Assume that the value that each of you places on this book is the same as that you placed on the previous book.
The K-Nine dog food company is considering the purchase of additional canning equipment. They expect that adding the equipment will yield $200,000 at the end of the first year and $250,000 at the end of the second year and then nothing after that. At which of the following prices and interest rates would K-Nine buy the equipment?
a. $415,000 if the interest rate is 5% b. $419,000 if the interest rate is 4% c. K-Nine would buy the equipment in both cases. d. K-Nine would not buy the equipment in either case.
Some nations try to nurture and encourage new firms with lots of promise, so they protect them from foreign competition. This is called the _________ argument for trade protection.
a. home nation unemployment b. level playing field c. efficiency d. infant industry