Question

ugh there is no time limit except for the due date itself, you may only take this homework Question 1 2 pts According to the class, why does the AD curve have a negative slope? When P rises, people substitute away from more expensive goods and services so AD decreases When P rises, the purchasing power of income falls so AD decreases When Prises, G decreases which means AD decreases When Prises, the suply of money shifts left sor falls so AD decreases Because your instructor says so Question 2 2 pts Recall the trend over time of labor productivity increasing (because of technology advancement, increases in education, etc.). Given what the lecture slides say causes shifts in the LRAS curve, the LRAS curve would tend to shift right over time. True False

Answer 1

1. When P rises, the purchasing power of income falls so AD decreases.
(With increase in price, purchasing power decreases sue to which AD decreases. So, AD is negatively sloped.)

2. True
(Due to technological advancement, overall productivity in the economy increases. So, LRAS would tend to shift right over time.)