Question

Draw the relevant graphs indicating shifts of ad and/or short-run as to find out the new price and output.

a. the u.s. imposes tariffs on foreign goods to promote domestic industry.
b. congress decides to decrease personal income taxes, and to compensate for the lost revenue they decrease business subsidies.
c. rising stock market prices increase the wealth of americans. as a result, they spend more.
d. a recession of major trading countries like canada lowers the demand for u.s. exports.

Answer 1

When the U.S. imposes tariffs on foreign goods, it affects the supply curve, resulting in a higher equilibrium price and a lower quantity. Decreasing personal income taxes and business subsidies can affect both supply and demand. Rising stock market prices increase the demand, resulting in a higher price and quantity. A recession in major trading countries lowers the demand for U.S. exports, resulting in a lower price and quantity.

Step-by-step explanation:

Graphs:

a. When the U.S. imposes tariffs on foreign goods, it affects the supply curve. It can be shown as a leftward shift in the supply curve, resulting in a higher equilibrium price and a lower equilibrium quantity.

b. When Congress decreases personal income taxes and business subsidies, it affects both supply and demand. Decreasing business subsidies shifts the supply curve to the left, while decreasing personal income taxes shifts the demand curve to the right. The combined effect will depend on the magnitude of the shifts.

c. When rising stock market prices increase the wealth of Americans, it affects the demand curve. It can be shown as a rightward shift in the demand curve, resulting in a higher equilibrium price and a higher equilibrium quantity.

d. When a recession in major trading countries lowers the demand for U.S. exports, it affects the demand curve. It can be shown as a leftward shift in the demand curve, resulting in a lower equilibrium price and a lower equilibrium quantity.