1. Assume that the U.S. macroeconomy can be described by a graph that represents the sum of all the demand for final goods and services bought within the U.S., as well as the supply of all final goods and services sold within the U.S. The sum of all demands will be embodied by one curve, the Aggregate Demand curve, while the sum of all supply is embodied by one curve as well, the Aggregate Supply curve. This gives us the Aggregate Demand-Aggregate Supply graph.

a. Use the Aggregate Demand-Aggregate Supply graph to explain how improvements in technology affect the U.S. macroeconomy.

b. Use the Aggregate Demand-Aggregate Supply graph to explain how decreases in the rate of productivity would affect the U.S. macroeconomy.

c. Use the Aggregate Demand-Aggregate Supply graph to explain how decreases in the tax rate on consumer income would affect the U.S. macroeconomy.

d. Assume that the U.S. Aggregate Supply curve is a vertical line. Use the Aggregate Demand-Aggregate Supply graph to explain how decreases in the tax rate on consumer income would affect the U.S. macroeconomy now.