Why does the aggregate demand curve slope downward?
The effect of higher prices on consumer wealth is one of several reasons why the aggregate demand curve slopes downward. Higher prices decrease the demand for goods and services because they erode the purchasing power of consumer wealth. Conversely, lower prices increase the demand for goods and services by enhancing the purchasing power of consumer wealth. Second reason comes from international trade. High domestic prices will depress a country's export and stimulate imports. This will shift total expenditure curve downward and lower the real GDP.
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Which of the following is a credit in the U.S. current account? a. A U.S. consumer buys a TV made in Malaysia
b. Singapore Airlines buys a jumbo jet made in the United States. c. British investors purchase U.S. government bonds. d. An American citizen flies to Lithuania on the Lithuanian Airlines.
Which of the following types of goods is subject to the free-rider problem?
A) a private good B) a public good C) a product that creates a positive externality D) a product that creates a negative externality
Suppose the principal offers to share a percentage of the profit with the agent. Such a contract
A) will yield the same income for the agent as a hire contract would. B) is incentive compatible. C) creates a production inefficiency. D) would not be acceptable to any agent.
In 2008, the nominal minimum wage rate was $7.25 an hour and the CPI was 200. The real minimum wage rate in 2008 was
A) $3.63 an hour. B) $14.50 an hour. C) $1450 an hour. D) $26.32 an hour. E) $7.25 an hour.