Explain in detail why the aggregate demand curve slopes downward in the standard IS-LM model. Then...
Explain in detail why the aggregate demand curve slopes downward in the standard IS-LM model. Then explain why the Long-run Aggregate Supply Curve is vertical.
Homework Answers
Answer - The slope of the demand curve for the money in the IS LM model is downward sloping or it has a negative slope . The demand for the money is inversely proportional to the rate of interest. The lower interest rates will increase the ability to borrow. Hence increase the money demand. This inverse relationship gives the money demand curve , the downward slope.
The money supply curve is vertical in long run. This means that it is inelastic in the long run. This is because the price levels in the economy is not able to influence the money supply in long run . It can only be shifted in long run as a result of the change in output level and productivity.
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Explain in detail why the aggregate demand curve slopes downward
in the standard IS-LM model. Then...
explain in detail why the demand curve slopes downward
explain in detail why the demand curve slopes downward
question 1,2,3 and 4 Explain the three reasons why the aggregate-demand curve slopes downward.. Give an...
question 1,2,3 and 4
Explain the three reasons why the aggregate-demand curve slopes downward.. Give an example of an event that would shift the aggregate-demand cure. Which way would this event shirt the curve? 2. Suppose that the election of a popular prime minister suddenly increases les confidence in the future. Use the model of aggregate demand and aggregate supply to analyze the effect on the economy Name two macroeconomic variables that decline when the economy goes into a recession....
1) List and explain the three reasons the aggregate-demand curve is downward sloping. 2) Explain why...
1) List and explain the three reasons the aggregate-demand curve is downward sloping. 2) Explain why the long-run aggregate-supply curve is vertical. 3) What causes aggregate demand to shift to the left and what causes an aggregate demand to shift to the right? Give one example for each scenario. 4) Explain why economic fluctuate in the short term and contrast short-term and long-term economic performance. 5) How can we use the aggregate demand and supply models to study the sources...
Why is the Phillips curve downward sloping? Use the model of aggregate demand and aggregate supply...
Why is the Phillips curve downward sloping? Use the model of aggregate demand and aggregate supply to explain with graph. (18marks)
1. Explain why the aggregate demand (AD) curve is downward slopping (on the two dimensional price...
1. Explain why the aggregate demand (AD) curve is downward slopping (on the two dimensional price and output planes) in the neoclassical ASAD model. 2. Explain why the aggregate demand (AD) curve is downward slopping (on the two dimensional price and output planes) in the Post-Keynesian ASAD model. 3-4. In the neoclassical ASAD model, let us suppose that the interest rate has no effect on investment. What does this imply for (1) the slope of the IS curve, for (2)...
Economists use the model of aggregate demand and aggregate supply to explain downward sloping Phillips curve....
Economists use the model of aggregate demand and aggregate supply to explain downward sloping Phillips curve. Elaborate using appropriate graph.
Using the IS-LM and Aggregate Supply-Aggregate Demand (AS-AD) models of Chapter 12 with a flat short-run...
Using the IS-LM and Aggregate Supply-Aggregate Demand (AS-AD) models of Chapter 12 with a flat short-run AS curve (that is, completely sticky prices), suppose the economy is at the natural rate of unemployment and so, at long-run equilibrium. Suddenly, taxes are reduced with no change in government spending. Tell me (or show on a graph) what happens to the IS and/or LM curves. Show on a different graph what happens on the AS-AD diagram in the short-run (drawing in the...
The economic model of aggregate demand curve and aggregate supply curve helps explain the A. three...
The economic model of aggregate demand curve and aggregate supply curve helps explain the A. three goals of economic policy which are economic growth, high inflation, and full employment. B. expansion and contractions in individual markets. C. shifts in real GDP and the price level. Which of the following descriptions reflects the AD-AS model most accurately? A. Real GDP is shown on the vertical axis and the price level is shown on the horizontal axis. B. Aggregate supply is shown...
Which of the following help to explain why the aggregate demand curve slopes downward?
Which of the following help to explain why the aggregate demand curve slopes downward? Instructions: You may select more than one answer. Click the box with a check mark for correct answers and click to empty the box for the wrong answers. When the domestic price level rises, our goods and services become more expensive to foreigners When government spending rises, the price level falls There is an inverse relationship between consumer expectations and personal taxes When the price level rises, the real value of...
In the aggregate demand and aggregate supply model, a. the factors that cause the individual supply...
In the aggregate demand and aggregate supply model, a. the factors that cause the individual supply curve to slope upward are the same as the factors that cause the short-run aggregate supply curve to slope upward. b. the upward-sloping short-run aggregate supply curve intersects the downward-sloping aggregate demand curve to determine the economy's price level and GDP. c. the factors that cause the individual demand curve to slope downward are the same as the factors that cause the aggregate demand...
question 1,2,3 and 4
Explain the three reasons why the aggregate-demand curve slopes downward.. Give an example of an event that would shift the aggregate-demand cure. Which way would this event shirt the curve? 2. Suppose that the election of a popular prime minister suddenly increases les confidence in the future. Use the model of aggregate demand and aggregate supply to analyze the effect on the economy Name two macroeconomic variables that decline when the economy goes into a recession....
1. Explain why the aggregate demand (AD) curve is downward slopping (on the two dimensional price and output planes) in the neoclassical ASAD model. 2. Explain why the aggregate demand (AD) curve is downward slopping (on the two dimensional price and output planes) in the Post-Keynesian ASAD model. 3-4. In the neoclassical ASAD model, let us suppose that the interest rate has no effect on investment. What does this imply for (1) the slope of the IS curve, for (2)...
Using the IS-LM and Aggregate Supply-Aggregate Demand (AS-AD) models of Chapter 12 with a flat short-run AS curve (that is, completely sticky prices), suppose the economy is at the natural rate of unemployment and so, at long-run equilibrium. Suddenly, taxes are reduced with no change in government spending. Tell me (or show on a graph) what happens to the IS and/or LM curves. Show on a different graph what happens on the AS-AD diagram in the short-run (drawing in the...
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