The slope of the ad curve:

(a) why does the ad curve slope downward?
(b) if the ad curve were more steeply sloped, how would the economy respond differently to aggregate demand shocks (shocks to a¯ )?
(c) if the curve were more steeply sloped, how would the economy respond differently to aggregate supply shocks (shocks to o¯ )?
(d) what kind of economic changes in the economy would lead the curve to be more steeply sloped?

Consider a small island country whose only industry is weaving. the following table shows information about the small economy in two different years. complete the table by calculating physical capital per worker as well as labor productivity. hint: recall that productivity is defined as the amount of goods and services a worker can produce per hour. in this problem, measure productivity as the quantity of goods per hour of labor. year physical capital labor force physical capital per worker labor hours output labor productivity (looms) (workers) (looms) (hours) (garments) (garments per hour of labor) 2024 160 40 1,800 14,400 2025 180 60 3,900 23,400