Which of the following reasons helps explain why the aggregate demand curve is downward sloping?
a. The real balances effect or wealth effect: Consumers spend more on goods and services when the price level falls because lower prices increase consumer purchasing power.
b. The producer-push effect: At less than full employment, increases in quantity demanded will raise price, and thus will motivate sellers to produce more.
c. The hidden inflation effect: As the price level rises, consumers fail to recognize that prices are higher, and consequently they fail to reduce expenditures on goods and services.
d. None of the above.
a
You might also like to view...
Consider the market for credit. When the supply of credit increases while the demand for credit remains unchanged,
A) the interest rate will decrease and the amount of credit provided in the market will increase. B) the interest rate will increase and the amount of credit provided in the market will increase. C) the interest rate will decrease and the amount of credit provided in the market will decrease. D) the interest rate will increase and the amount of credit provided in the market will decrease.
If price rises, what happens to quantity supplied of a product?
a. It increases. b. It decreases. c. It does not change. d. Quantity supplied is constant, but supply increases.
Based on the graph for the Gini Coefficient, as income inequality increases, Area A ______.
a. grows larger
b. grows smaller
c. disappears
d. divides into halves
Refer to the information provided in Figure 2.4 below to answer the question(s) that follow.
Figure 2.4According to Figure 2.4, an increase in unemployment may be represented by the movement from
A. B to A. B. A to C. C. C to D. D. B to D.