The aggregate demand curve portrays the relationship between price level and real GDP. What are the three reasons this relationship is a negative or inverse relationship? Provide brief illustrations of each
The three complementary explanations for the negative slope of the aggregate demand curve include are the real wealth effect, the interest rate effect, and the open economy effect. Brief examples accepted at instructor discretion.
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Consider the above figure. At income level Yd = $110, the APS is equal to
A) -0.36. B) 0.32 C) 0.64. D) 1.10.
Suppose that the local health board discovers some unsanitary conditions at your favorite sushi restaurant. An economist would likely have what to say about this situation?
A) "All unsanitary conditions at this restaurant must be eliminated." B) "The restaurant owner obviously cares more about profits than about his customers." C) "No one should eat at this restaurant due to the potential health hazard." D) "Eliminating all of the unsanitary conditions might cost more than the value of the benefits that would be gained."
Which of the following transactions directly leads to a surplus on the U.S. capital and financial account?
A) An American purchases a share of stock on the Tokyo exchange. B) An American sells wheat to an African nation. C) A Japanese resident purchases a U.S. government bond. D) A resident of France visits the United States.
In the Keynesian model, exogenous variables include
a. planned investment. b. taxes. c. planned inventories and government spending. d. planned investment and government spending. e. all of the above