What is aggregate demand? What are its major components?
What will be an ideal response?
Aggregate demand is the total amount that all consumers, business firms, and government agencies spend on final goods and services. The major components are:1. Consumer expenditure is the total value of all consumer goods and services demanded.2. Investment spending is the amount that firms spend on factories, machinery, software, and the like, plus the amount that families spend on new houses.3. Government purchases of goods and services, includes items such as paper, computers, airplanes, ships, and labor bought by all levels of government.4. Net exports is defined as U.S. exports minus U.S. imports.
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Some economists suggest the optimal way for a nation to protect its access to a strategic mineral is with
A) an infant industry tariff. B) a high rate of effective protection to keep local mines in business. C) a quota on imports of the mineral. D) a low nominal rate of protection. E) a stockpile.
Suppose the Pleasant Corporation cuts the price of its American Girl dolls by 10 percent, and as a result, the quantity of the dolls sold increases by 25 percent. This indicates that the price elasticity of demand for the dolls over this range is
a. 2.5. b. 0.4. c. 0.5. d. 5. e. inelastic.
Figure 32.1 represents the market for loanable funds. Which of the following is true at the equilibrium interest rate?
A. The rate of return on capital is greater than the interest rate. B. The rate of return on capital equals the interest rate. C. The rate of return on capital is less than the interest rate. D. There is no relationship between the rate of return on capital and the interest rate.
Since 1994 the number of people on the welfare rolls has
A. risen substantially. B. risen slightly. C. stayed about the same. D. fallen substantially.