Explain how the interest rate effect can increase aggregate demand
What will be an ideal response?
In an economy with a fixed supply of money, price level changes lead to interest rate changes. If price levels drop, interest rates fall. When interest rates fall, both consumers and businesses will find it cheaper to borrow money to make purchases. The increases in consumer and business spending increase aggregate demand.
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The figure above shows the U.S. production function. How would an increase in income taxes be shown in the figure?
A) a movement from point C to point B B) a movement from point A to point B C) an upward shift or rotation of the production function D) a downward shift or rotation of the production function E) None of the above because the effects of an increase in taxes cannot be shown in the figure.
The above figure shows the apartment rental market in Bigtown. If the Bigtown Housing Authority imposes a rent ceiling of $500 per apartment, the deadweight loss will be
A) $1,000,000. B) $500,000. C) $250,000. D) $125,000.
Roughly what percentage of Americans were officially considered poor in 2012?
a. 2 percent b. 9 percent c. 15 percent d. 22 percent
Most checkable deposits are insured up to $250,000 by
a. state banking commissions. b. the Federal Reserve Board. c. U.S. Department of the Treasury. d. the Federal Deposit Insurance Corporation.