What two variables are determined in an aggregate supply-aggregate demand figure? Is the slope of the aggregate supply curve positive or negative? Is the slope of the aggregate demand curve positive or negative?
What will be an ideal response?
The aggregate supply-aggregate demand framework determines the equilibrium price level and equilibrium real GDP. The aggregate supply curve is positively sloped, indicating that an increase in the price level increases the aggregate quantity of goods and services supplied. The aggregate demand curve is negatively sloped, indicating that an increase in the price level decreases the aggregate quantity of goods and services demanded.
You might also like to view...
During the winter of 2011-2012, the price of fuel oil increased enormously but the quantity demanded decreased only a little. This response indicates that the demand for fuel oil was
A) inelastic. B) elastic. C) unit elastic. D) perfectly elastic. E) perfectly inelastic.
What do economists call the situation where a hired manager does not have the same interests as the owners of the business?
A) a financial intermediary problem B) a principal-agent problem C) conquest and control D) a financial problem
A U.S. automobile dealer has ordered a fleet of Japanese cars worth 10 million yen. The terms of payment is C.O.D. (cash on delivery). At the time the order was placed, the exchange rate was 100 yen per U.S. dollar
When the fleet arrived the exchange rate had become 200 yen per U.S. dollar. A) This change in the foreign exchange rate will hurt the U.S. importer. B) This change in the foreign exchange rate will hurt the Japanese exporter. C) This change in the foreign exchange rate will benefit the U.S. importer. D) This change in the foreign exchange rate will benefit the Japanese exporter.
When the Fed increases the money supply, interest rates
a. rise, causing velocity to fall. b. fall, causing velocity to fall. c. rise, causing velocity to rise. d. fall, causing velocity to rise.