Homework Answers
Answer : The IS curve shows the inverse relationship between interest rate and real GDP. If interest rate decrease then people save less and send more. As a result, the aggregate expenditure increase. On the other side, decreas in interest rate higher the equilibrium GDP level. Therefore, for first blank box the answer is "an increase" and for second blank box the answer is "higher".
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The IS curve is downward sloping because a lower interest rate causes an increase in aggregate...
Why is the AD curve downward? sloping pick one answer below: A. The higher interest rate...
Why is the AD curve downward? sloping pick one answer below: A. The higher interest rate produced by a lower price level leads to more consumption? spending, investment? spending, and net exports. B. An increase in the price level decreases real money? balances, which raises the interest rate. The higher interest rate decreases consumption? spending, investment? spending, and net exports. C. AD slopes downward for the same reasons the demand for an individual good slopes? downward: because of income and...
Given a downward-sloping aggregate demand (AD) curve and an upward-sloping short-run aggregate supply curve (SRAS), equilibrium...
Given a downward-sloping aggregate demand (AD) curve and an upward-sloping short-run aggregate supply curve (SRAS), equilibrium occurs where the two intersect. The value on the vertical axis is the equilibrium price level and the value on the horizontal axis is the equilibrium value of real GDP or output. What happens to the economy when AD shifts? It is useful to sketch a graph and show the shift. Suppose, for example, interest rates fall or wealth increases due to a stock...
In order for the aggregate demand (AD) curve to be downward-sloping, O there has to be...
In order for the aggregate demand (AD) curve to be downward-sloping, O there has to be an inverse relationship between the real interest rate and real GDP and a positive relationship between inflation and the real interest rate. O there has to be an inverse relationship between the real interest rate and real GDP but there cannot be a relationship between inflation and the real interest rate. there has to be an inverse relationship between the real interest rate and...
10 ots The money market model shows how the interaction of potential GDP and aggregate demand...
10 ots The money market model shows how the interaction of potential GDP and aggregate demand determines the real GDP in the economy. The aggregate expenditure curve is downward sloping because people want to hold more money when the interest rate is higher ". On the other hand, the aggregate demand 7 curve is vertical If prices in the economy increase, then the money demand curve shifts inwards and the interest rate increases To lower the interest rate in the...
The Keynesian zone of the aggregate supply curve is_._while the neoclassical portion is_.... O upward-sloping, downward-sloping...
The Keynesian zone of the aggregate supply curve is_._while the neoclassical portion is_.... O upward-sloping, downward-sloping horizontal; vertical O vertical; flat How does the intermediate zone of the AD-AS curve follow Say's law when AD shifts to the right? O SRAS creates more demand by decreasing prices and output level. SRAS moves closer to potential GDP and increases price level. O SRAS is flatter and creates more supply by decreasing prices and output level Which of the following statements about...
What is the shape of the intermediate zone of the AD-AS curve? horizontal upward-sloping downward-sloping When...
What is the shape of the intermediate zone of the AD-AS curve? horizontal upward-sloping downward-sloping When does the GDP gap shrink? It shrinks as the government reduces the budget deficit through discretionary fiscal policy. It shrinks as the economy recovers from recession. It shrinks as the economy is contracting with government intervention. Since the change in GDP is a greater change than in the expenditure model the multiplier has a value ________. greater than one equal to one A rightwards...
in a market with an upward sloping supply curve and a downward sloping demand curve, when...
in a market with an upward sloping supply curve and a downward sloping demand curve, when there is an excess supply, a. b. c. The actual price must be higher that the equilibrium price. The actual price must be lower that the equilibrium price. The quantity demanded is higher than the equilibrium quantity.
14000 Aggregate Expenditures when P= 100 12000 10000 8000 Planned Aggregate Expenditure (AE) - 6000 -- 4000 - - 2000 07...
14000 Aggregate Expenditures when P= 100 12000 10000 8000 Planned Aggregate Expenditure (AE) - 6000 -- 4000 - - 2000 07 O 2000 4000 6000 8000 10000 12000 14000 Real GDP (Y) Aggregate Demand 140 Price Level 120 0 2000 4000 6000 8000 1000012000140001600018000 In the figures above, if autonomous spending rises for any reason other than a decrease in the price level, then: The Aggregate Expenditure curve will shift down and there will be a downward movement along the...
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)
3. Suppose a straight-line, downward-sloping demand curve shifts right due to an increase in consumer preferences....
3. Suppose a straight-line, downward-sloping demand curve shifts right due to an increase in consumer preferences. Is the price elasticity of demand higher, lower, or the same between any two prices on the new (higher) demand curve than on the old (lower) demand curve?
In order for the aggregate demand (AD) curve to be downward-sloping, O there has to be an inverse relationship between the real interest rate and real GDP and a positive relationship between inflation and the real interest rate. O there has to be an inverse relationship between the real interest rate and real GDP but there cannot be a relationship between inflation and the real interest rate. there has to be an inverse relationship between the real interest rate and...
10 ots The money market model shows how the interaction of potential GDP and aggregate demand determines the real GDP in the economy. The aggregate expenditure curve is downward sloping because people want to hold more money when the interest rate is higher ". On the other hand, the aggregate demand 7 curve is vertical If prices in the economy increase, then the money demand curve shifts inwards and the interest rate increases To lower the interest rate in the...
The Keynesian zone of the aggregate supply curve is_._while the neoclassical portion is_.... O upward-sloping, downward-sloping horizontal; vertical O vertical; flat How does the intermediate zone of the AD-AS curve follow Say's law when AD shifts to the right? O SRAS creates more demand by decreasing prices and output level. SRAS moves closer to potential GDP and increases price level. O SRAS is flatter and creates more supply by decreasing prices and output level Which of the following statements about...
in a market with an upward sloping supply curve and a downward sloping demand curve, when there is an excess supply, a. b. c. The actual price must be higher that the equilibrium price. The actual price must be lower that the equilibrium price. The quantity demanded is higher than the equilibrium quantity.
14000 Aggregate Expenditures when P= 100 12000 10000 8000 Planned Aggregate Expenditure (AE) - 6000 -- 4000 - - 2000 07 O 2000 4000 6000 8000 10000 12000 14000 Real GDP (Y) Aggregate Demand 140 Price Level 120 0 2000 4000 6000 8000 1000012000140001600018000 In the figures above, if autonomous spending rises for any reason other than a decrease in the price level, then: The Aggregate Expenditure curve will shift down and there will be a downward movement along the...
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