Homework Answers
Answer 1:
Option B. According to the Keynesian perspective, increase in aggregate demand in the economy is caused by an increase in foreign demand for net exports. This increases net exports and thus overall aggregate demand in the economy.
Answer 2:
Menu Costs. Price changes can lead to re printing of the menu of the firms correcting all the prices, thus leading to what is called as the menu cost for the firm.
Answer 3:
Interest rates. Interest rates is considered as a key component by businesses when determining the amount to take on with investment spending. Thus, rate of interest is considered as the price of investment.
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According to the Keynesian perspective, reasons for an increase in aggregate demand include O relative price...
An increase in aggregate demand would cause foreign investment to rise. unemployment to rise. the price...
An increase in aggregate demand would cause foreign investment to rise. unemployment to rise. the price levels to rise. The aggregate demand represents total spending on ________. a nation’s total budget a nation’s domestic output of goods and services the total supply of domestic and imported goods Which component of aggregate demand would initially be affected by a change in exchange rates? consumption net exports government spending
1. Aggregate demand curves slope downwards for each of the following reasons EXCEPT A. The wealth...
1. Aggregate demand curves slope downwards for each of the following reasons EXCEPT A. The wealth effect: As the price level falls, the buying power of people's savings increases and induces them to spend more. B. The substitution effect: As the price level falls, people buy more of the cheaper goods and less of other goods. c. The interest rate effect: As prices for outputs rise, it costs more to make the same purchases, driving up the demand for money,...
An increase in foreign prices relative to the price level in the
An increase in foreign prices relative to the price level in the U.S. will cause: U.S. net exports to rise. US aggregate demand to fall. U.S.net exports to fallIf you are looking at a graph where a cumulative upward sloping curve plots the relationship between price level and output for suppliers, you are looking at a aggregate demand curve graph. aggregate supply curve graph. microeconomic supply graph.The economy has shifted and the quantity of the real GDP supplied has increased. What has potentially happened to aggregate...
A vertical AS curve means that changes in GDP will be caused by changes in potential...
A vertical AS curve means that changes in GDP will be caused by changes in potential output. changes in aggregate demand. cyclical unemployment. Jontel got a raise, which may help the economy since she will likely consume more goods and services. she will likely put more money in savings. she will likely hoard more money to prepare for fluctuations in the economy. If Keynesian economists were analyzing the oncoming recession starting in 2007 from the housing market crash, what might...
How would aggregate demand change if foreign incomes increase and the exchange rate value of the...
How would aggregate demand change if foreign incomes increase and the exchange rate value of the dollar increases? a. Neither change would affect aggregate demand. b. The increase in income would decrease aggregate demand; the increase in the exchange rate would increase aggregate demand. c. The increase in income would increase aggregate demand; the increase in the exchange rate would decrease aggregate demand. d. Both changes would decrease aggregate demand If the exchange rate value of the dollar depreciates relative...
True or False: The reasons for the downward slope of an aggregate demand curve include the real b...
True or False: The reasons for the downward slope of an aggregate demand curve include the real balances effect, the interest-rate effect, and the net exports effect. True O False Although the AD and market demand curves are both downward sloping, the two concepts are different because the AD curve deals with prices and a ー, while the market demand curve deals with prices and a For each scenario in the following table, indicate whether the aggregate demand curve will...
An increase in U.S. aggregate demand can be caused by: O an increase in interest rates....
An increase in U.S. aggregate demand can be caused by: O an increase in interest rates. the depreciation of the U.S. dollar. O a cut in government spending. O a rise in consumer debt.
1. Which of the following is not a property of the aggregate demand curve? It shows...
1. Which of the following is not a property of the aggregate demand curve? It shows the relationship between the overall price level and level consumption. It shows the price level on the vertical axis and output on the horizontal axis. The aggregate demand curve slopes downward. It shows the relationship between the overall price level and the level of total demand. 2. When the price level increases people: feel more wealthy. have the same real value of assets, regardless...
12. A 30 percent increase in the aggregate price level will: O increase money demand by...
12. A 30 percent increase in the aggregate price level will: O increase money demand by 30 percent. O increase money demand by the money multiplier. O decrease money demand by 30 percent. O not affect the demand for money
Which would most likely shift the aggregate supply curve? A change in the prices of _____....
Which would most likely shift the aggregate supply curve? A change in the prices of _____. domestic products foreign products financial assets resources A decrease in aggregate demand in the short run will reduce _____. both real output and the price level the price level and increase the real domestic output the real domestic output and have no effect on the price level the price level and have no effect on real domestic output The economy's long-run AS curve assumes...
1. Aggregate demand curves slope downwards for each of the following reasons EXCEPT A. The wealth effect: As the price level falls, the buying power of people's savings increases and induces them to spend more. B. The substitution effect: As the price level falls, people buy more of the cheaper goods and less of other goods. c. The interest rate effect: As prices for outputs rise, it costs more to make the same purchases, driving up the demand for money,...
True or False: The reasons for the downward slope of an aggregate demand curve include the real balances effect, the interest-rate effect, and the net exports effect. True O False Although the AD and market demand curves are both downward sloping, the two concepts are different because the AD curve deals with prices and a ー, while the market demand curve deals with prices and a For each scenario in the following table, indicate whether the aggregate demand curve will...
An increase in U.S. aggregate demand can be caused by: O an increase in interest rates. the depreciation of the U.S. dollar. O a cut in government spending. O a rise in consumer debt.
12. A 30 percent increase in the aggregate price level will: O increase money demand by 30 percent. O increase money demand by the money multiplier. O decrease money demand by 30 percent. O not affect the demand for money
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