List the factors that change demand and shift the demand curve. Tell what happens to demand and the demand curve when there is an increase in the factor
What will be an ideal response?
One factor that changes demand is a change in income. An increase in income increases demand and shifts the demand curve rightward for a normal good. An increase in income decreases demand and shifts the demand curve leftward for an inferior good. A change in the price of a substitute or complement also changes demand. An increase in the price of a substitute increase demand and shifts the demand curve rightward while an increase in the price of a complement decreases demand and shifts the demand curve leftward. Expectations, the number of buyers, and preferences also change demand. If people expect their income to increase, or if they expect its price to be higher in the future, or if the number of buyers increases, or if people's preferences for the good increase, demand increases and the demand curve shifts rightward.
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The American Dairy Association starts a highly successful advertising campaign that makes most people want to drink more milk. As a result,
A) the demand for milk increases. B) the quantity demanded of milk increases. C) the price of milk falls to encourage people to drink more milk. D) the demand for milk is not affected. E) the demand for milk decreases because the price of milk rises.
On the 45-degree line diagram, the 45-degree line shows points where
A) real aggregate expenditure equals real GDP. B) real aggregate expenditure equals C + I. C) real income equals real GDP. D) real aggregate output equals the quantity produced.
Net unilateral transfers would appear in a nation's
A) current account. B) capital account. C) official reserve transaction account. D) financial account.
Suppose the economy had been operating along a given short-run Phillips curve for several years and then experienced a year of stagflation. The year of stagflation would: a. be represented as a move upward along the short-run Phillips curve. b. be represented as a move downward along the short-run Phillips curve. c. be represented as a point above the short-run Phillips curve
d. be represented as a point below the short-run Phillips curve. e. correspond to the origin.