the interest rate effect helps explain why a lower price level sill reduce the quanity of...
Homework Answers
Ans. True - This statement is absolutely true. The interest rate effect surely helps in explaining why a price level still reduce the quantity of real goods and services demanded as an economy moves along it's Aggregate demand curve.
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the
interest rate effect helps explain why a lower price level sill
reduce the quanity of...
If at some specific interest rate the quantity of money demanded is less than the quantity...
If at some specific interest rate the quantity of money demanded is less than the quantity of money supplied, people will desire to buy interest-earning assets causing the interest rate to decrease. Select one: True False In recent years, the Fed has conducted policy by setting a target for the federal funds rate. Select one: True False A decrease in taxes is an expansionary fiscal policy designed to increase aggregate demand and reduce unemployment. Select one: True False If aggregate...
2. Match the following terms with their definitions Answers Misperceptions Theory Exchange-rate effect Interest-rate effect Sticky-Wage Theory Full-employment output Options The production of goo...
2. Match the following terms with their definitions Answers Misperceptions Theory Exchange-rate effect Interest-rate effect Sticky-Wage Theory Full-employment output Options The production of goods and services that an economy achieves in the long run when unemployment is at its normal rate a. b. The short-run aggregate supply curve slopes upward because nominal wages are slow to adjust to changing economic conditions. When a fall in the U.S. price level causes U.S. interest rates to fall, the real value of the...
questions one and two 1. The interest rate effect, the real balance effect, and the foreign...
questions one and two
1. The interest rate effect, the real balance effect, and the foreign purchases effect suggest that the aggregate demand curve is downward sloping. True or false. A. True B. False 2. As the price level decreases, interest rates fall. Lower interest rates lead to increased household consumption. This is called the interest rate effect. True or false. A. True B. False
1. Which of the following properly describes the interest-rate effect? a. A higher price level leads to higher money demand, higher money demand leads to higher interest rates, and a higher interest rate increases the quantity of goods and serv
1. Which of the following properly describes the interest-rate effect? a. A higher price level leads to higher money demand, higher money demand leads to higher interest rates, and a higher interest rate increases the quantity of goods and services demanded.b. A higher price level leads to higher money demand, higher money demand leads to lower interest rates, and a lower interest rate reduces the quantity of goods and services demanded.c. A lower price level leads to lower money demand, lower...
26. are The four components of planned aggregate expenditures a. Consumption, investment, inventories, and government purchases....
26. are The four components of planned aggregate expenditures a. Consumption, investment, inventories, and government purchases. b. Consumption, planned investment, unplanned changes in inventory, and exports. c. Consumption, investment, government purchases, and net exports. d. Consumption, investment, exports and imports. 27. The aggregate demand (AD) curve slopes downward indicating that a. an increase in the general price level will reduce the aggregate quantity of goods and services demanded. b. an increase in the general price level will increase the aggregate...
What is the effect of an increase in the price level? The real value of dollar-denominated...
What is the effect of an increase in the price level? The real value of dollar-denominated assets will rise. The aggregate expenditure line will shift upward. The equilibrium level of output demanded will rise. There will be upward movement along a particular aggregate demand curve. The aggregate demand curve will shift rightward.
A decrease in the price level causes households to purchase more goods and services. This is...
A decrease in the price level causes households to purchase more goods and services. This is illustrated on the AD/AS model as a shift of the aggregate demand curve to the right. Select one: True False A realistic unemployment rate in the U.S. that corresponds with a real GDP growth rate of 0.5 percent growth would be a rate that is above 5 percent. Select one: True False Suppose a stock market crash makes people feel less wealthy. The decrease...
1. Determine the effect on aggregate demand of each of the following events. Explain whether it...
1. Determine the effect on aggregate demand of each of the following events. Explain whether it represents a movement along the aggregate demand (up or down) or a shift of the curve (leftward or rightward). Draw the graph and show your work. (e) a rise in the real value of assets in the economy due to a lower aggregate price level. (f) a rise in the real value of assets in the economy due to a surge in real estate...
The exchange rate effect of a price increase is: if the US price level increases, then the Fed increases interest rate i...
The exchange rate effect of a price increase is: if the US price level increases, then the Fed increases interest rate in order to stabilize the price level. As a result US dollar appreciates causing US exports to decreases. a. False b. True If the Fed increases money supply, then: a. the value of money decreases. b. the price level increases. c. Both of the above d. none of the above Which of the following will the Aggregate Demand curve...
Question 1 An increase in the price level will ________ the real value of wealth and,...
Question 1 An increase in the price level will ________ the real value of wealth and, as a result, there will be ________ the aggregate demand curve. have no effect on; no change in increase; a rightward shift of reduce; an upward movement along reduce; a leftward shift of increase; an upward movement along 2. A severe drought hits a country and reduces farm output by 50 percent. This will impact aggregate demand. short-run aggregate supply and aggregate demand. short-run...
2. Match the following terms with their definitions Answers Misperceptions Theory Exchange-rate effect Interest-rate effect Sticky-Wage Theory Full-employment output Options The production of goods and services that an economy achieves in the long run when unemployment is at its normal rate a. b. The short-run aggregate supply curve slopes upward because nominal wages are slow to adjust to changing economic conditions. When a fall in the U.S. price level causes U.S. interest rates to fall, the real value of the...
questions one and two
1. The interest rate effect, the real balance effect, and the foreign purchases effect suggest that the aggregate demand curve is downward sloping. True or false. A. True B. False 2. As the price level decreases, interest rates fall. Lower interest rates lead to increased household consumption. This is called the interest rate effect. True or false. A. True B. False
26. are The four components of planned aggregate expenditures a. Consumption, investment, inventories, and government purchases. b. Consumption, planned investment, unplanned changes in inventory, and exports. c. Consumption, investment, government purchases, and net exports. d. Consumption, investment, exports and imports. 27. The aggregate demand (AD) curve slopes downward indicating that a. an increase in the general price level will reduce the aggregate quantity of goods and services demanded. b. an increase in the general price level will increase the aggregate...
1. Determine the effect on aggregate demand of each of the following events. Explain whether it represents a movement along the aggregate demand (up or down) or a shift of the curve (leftward or rightward). Draw the graph and show your work. (e) a rise in the real value of assets in the economy due to a lower aggregate price level. (f) a rise in the real value of assets in the economy due to a surge in real estate...
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