Determine if the following changes to the economy are examples of financial, spending, or supply shocks. For each case, explain whether the IS, MP, or Phillips curve will shift, and in what direction. a. The Chinese government eliminates the tariffs it charges on goods exported from the United States.
b. The implementation of artificial intelligence in manufacturing has led to faster than expected productivity growth, which results in decreasing production costs.
c. A financial crisis makes banks extremely reluctant to take on risky loans without charging an extremely high risk premium.
d. Businesses’ confidence about the future of the economy falls, which leads them to scrap planned investment projects.
e. The Federal Reserve raises the federal funds rate from 4% to 5%.
e. The federal government cuts the corporate tax rate, a move applauded by business executives who say that it will make more investment opportunities profitable.