Business Economics Assignment

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BUSINESS ECONOMICS ASSIGNMENT

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Contents
Question 9..................................................................................................................................3
Question 10................................................................................................................................6
Question 11................................................................................................................................7
Question 13................................................................................................................................8
Question 14................................................................................................................................8
Reference..................................................................................................................................11

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Question 9
a)
Figure 1: The rightward shift in the AD curve
(Source: Agénor & Montiel, 2015)
The decrease in the personal income tax will increase the disposable income of the
customers. Consumption which is a component of aggregate demand will increase and hence
the AD curve will shift to the right. Consequently, both the price and the output will increase.
b)

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Figure 2: the shift in the AS curve
(Source: Mankiw, 2014)
Increase in the level of skill of the worker would influence the supply side. The supply side
would produce more products at the given price and hence the AS curve would shift to the
right. The resultant equilibrium would show a higher output and lower prices.
c)