What is the relationship between aggregate expenditure and aggregate demand?
What will be an ideal response?
An aggregate expenditure curve traces the various levels of planned spending that occur at different income levels. The price level is fixed along the AE curve. An aggregate demand curve, in contrast, traces the various levels of planned spending that occur at different price levels. The position of the AD curve is determined by considering the impact of different price levels on the AE curve. A decrease in the price level shifts the entire AE curve upward, resulting in a higher level of equilibrium output. The price level and output level thus associated represent a point on the AD curve.
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Fred spends all of his income on two goods: DVDs and downloaded music. If Fred's marginal utility per dollar from DVDs is greater than his marginal utility per dollar from downloaded music, Fred can ________ his total utility by buying ________
A) maximize; more DVDs and more downloaded music B) increase; more downloaded music and fewer DVDs C) increase; more DVDs and less downloaded music D) maximize; fewer DVDs and less downloaded music
Nominal gross domestic product (GDP) is a better measure of growth in production than real GDP
a. True b. False Indicate whether the statement is true or false
To counter a speculative attack on an overvalued currency, the monetary policymakers must ________ monetary policy and to fight a recession the monetary policymakers must ________ monetary policy.
A. tighten; ease B. ease; tighten C. tighten; tighten D. ease; ease
If product price increases, then:
A. MP will increase. B. MFC will increase. C. MRP will increase. D. MP will decrease.