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1. Using an AS/AD diagram, demonstrate graphically and explain verbally the short-run impact on the price level and real output of an increase in the labor productivity schedule. 2. For each of the following “quotes” from The Wall Street Journal, draw a picture to show how the AD curve will shift. Label your original curve AD0 and your new curve AD1. (a) “The value of the US dollar rose about 50% against the yen and 20% against the mark.”(b) “The Dow Jones Industrials closed above 15,000 for the first time”(c) “Federal investment in civilian capital and infrastructure, education, and research and development is falling.” I ask for the clear solutions to these questions.
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