The following are variables that may cause shifting of aggregate demand (AD) curve. Discuss the effect of increasing these variables to the aggregate demand. Use graphical approach to demonstrate the effect of increasing of each variable and explain why the AD curve shifted. a. Interest rate (domestic) b. Government expenditure (domestic)
Q: which one of the following is not a component of aggregate demand in the economy? A. consumption…
A: The economics as a study is based upon the idea that the prevails scarcity of resources in the…
Q: he aggregate demand curve portrays the relationship between price level and real GDP. What are the…
A: The downward sloping of aggregate demand is shown in the figure below.
Q: Consumer confidence grows for third straight month. 2. A technological breakthrough lowers the cost…
A: “Since you have posted a question with multiple sub-parts, we will solve first three subparts for…
Q: Which of the following would shift the U.S. aggregate demand curve to the left? Select all correct…
A: Aggregate demand and aggregate supply are important in macroeconomics. When aggregate demand and…
Q: Identify factors that would cause consumption spending to increase. What effect would that have on…
A: Consumer spending is the overall money expended for personal use and pleasure in an economy by…
Q: Using the aggregate demand and aggregate supply model, explain the effects of the following on price…
A: The decision to revamp the public transportation will increase government spending and raise the…
Q: Given the event below, describe the effect on the aggregate demand curve (AD). A.No effect…
A: Aggregate demand is the sum of consumption spending, investment spending, government spending, and…
Q: The following are variables that may cause shifting of aggregate demand (AD) curve. Discuss the…
A: Aggregate demand shows the total amount people planned to spend in a given year. It is the sum of…
Q: Refer to Figure 9.1. When the price level rises and causes lower consumption expenditures, it is…
A: In an economy aggregate demand curve shows the total output demanded by the households and other…
Q: Explain how each of the following affects consumption demand. (a) The expectation is that the…
A: Consumption is the part of income that is not saved from the income . And saving is used for the…
Q: Create a graph for an aggregate demand curve. Use the variable ‘Price Level’ for the vertical axis…
A: Answer to the question is as follows :
Q: Choose the correct statement: Select one: a.There is a negative relationship between the price level…
A: In macroeconomics, economic fluctuations are generally studied using the concepts of the aggregate…
Q: Aggregate Supply and Aggregate Demand Model (i) Examine the influence of government expenditure on…
A: Aggregate demand and aggregate supply model is one of the most important concepts used in macro…
Q: Economist A believes that changes in aggregate demand affect only the price level, and economist B…
A: Economist A believes that changes in aggregate demand only affects the only price level. Economist…
Q: Which of the following is not a reason for the downward slope of the aggregate demand curve? As the…
A: Aggregate demand curve is downward sloping indicating the inverse relationship between Price level…
Q: suppose that at a price index of 154 the quantity demand of u.s. real GDP is 10.0 trillion worth of…
A: Aggregate demand is expressed as the combinations of total demand for finished goods and services…
Q: What are the determinants of the Consumption element of Aggregate Demand?  It’s crucial to explain…
A: Aggregate demand (AD): - It is the total demand of goods and services in an economy at a particular…
Q: In 2014, China’s economy slowed significantly causing a decrease in demand for US exports. Use the…
A: Aggregate demand (AD) represents the total demand for the total output produced domestically at a…
Q: Aggregate demand is an economic measurement of the total amount of demand for all finished goods and…
A: Aggregate demand is calculated by taking the sum of its four components: consumption, investment,…
Q: Create a graph for an aggregate demand curve. Use the variable ‘Price Level’ for the vertical axis…
A: The aggregate demand curve shows the varied level of total expenditure of the economy at various…
Q: MCQ 3. Which of the following statements is true if there is an increase in aggregate demand while…
A: Aggregate demand: It is the sum total of the final value of all the goods and services that have…
Q: Aggregate demand is..? A) Sum of consumption, imports and exports. B) Sum of the demand for all of…
A: Meaning of Macroeconomics: The term macroeconomics refers to the situation of economic and…
Q: The following events shift either aggregate demand, aggregate supply, both or neither. Using a…
A: Aggregate demand = C + I + G + (X-M), C= consumption, I= Investment, G= Government spending, (X-M)…
Q: All of the following are included in the investment component of aggregate demand except purchase of…
A: Consumption, Investment, government spending and net exports are components of aggregate demand.
Q: Use two diagrams to explain the effects of the determinants of aggregate demand on real GDP in a…
A: Aggregate demand is the sum of consumption, investment, government spending and net export. Any…
Q: Consider the following equations describing the components of demand and equilibrium in the goods…
A: People studies economics to understand the changes or fluctuations in the market and economic…
Q: Using the aggregate demand and aggregate supply model, explain the effects of the following on price…
A: 1.Consumers are worried with the country’s economic progress. In this case, it indicates that they…
Q: The following graph shows the economy's aggregate demand curve. Show the impact of the increase in…
A: Aggregate demand refers to the amount if sales proceeds which an entrepreneur actually expects from…
Q: Using the aggregate demand and aggregate supply model, explain the effects of the following on price…
A: The sum of cash obtained by the people or an enterprise including the inflation is real income.…
Q: Define aggregate supply. Give three reasons why the aggregate supply curve slopes upward. Explain…
A: Aggregate supply is the total quantity of all goods and services that a firms in an economy plans to…
Q: The aggregate demand curve portrays the relationship between the price level and real GDP. What are…
A: The aggregate demand curve portrays that if the price level increases, the real GDP decreases and…
Q: The following events shift either aggregate demand, aggregate supply, both or neither. Jsing a…
A: Demand and supply depict the relationship between the quantity that consumers wish to buy and the…
Q: Choose the correct statement: Select one: a.There is a negative relationship between the price level…
A: The measure that depicts quantities of goods and services demanded at various levels of price is…
Q: What are the factors other than price that can shift aggregate demand curve in terms of investment…
A: Aggregate demand (Y) is the demand for all finished goods and services in the economy in a given…
Q: Discuss 4 components of aggregate demand? Find the largest and smallest component.
A: Aggregate demand is total demand for goods and services in an economy at a particular time period.
Q: On the following graph, plot the aggregate demand curve that results from varying the price level…
A: Demand refers to the willingness and ability of the consumer to purchase goods and services at given…
Q: In order to improve the living standards of the people in Philippines after the devastating typhoon…
A: In the Philippines, government Increases the wage rate to protect the interest of the workers as the…
Q: 1. Based on the table, identify and explain the components of Aggregated Demand. Show the variation…
A: Aggregate demand is the demand for all the finished goods and services in the economy. The equation…
Q: QUESTION 1 Aggregate Demand (AD) is drawn with price leel, average price for everything in the…
A: Through expenditure method nominal GDP is calculated. Expenditure method formula - Nominal GDP = C…
Q: Choose the correct statement: Select one: a.There is a negative relationship between the price level…
A: The measure that depicts quantities of goods and services demanded at various levels of price is…
Q: The following graph shows aggregate demand and short-run aggregate supply. Price level 1.) Use the…
A: Aggregate demand refers to the expected amount to be received by the producer by selling the goods…
Q: Gas prices have risen 38% in the last year. For every 10% increase in oil and gas prices the…
A: In an economic market, prices and quantities of goods sold and bought are determined by the market…
Q: What are the factors other than price that can shift aggregate demand curve in terms of investment…
A: Consumption spending and investment spending are part of aggregate demand.
Q: Two variables that affect the slope of the aggregate demand curve are Select one: a. tax rates and…
A: Aggregate Demand curve is the curve that represents the combinations of all components of GDP that…
Step by step
Solved in 3 steps with 1 images
- The following are variables that may cause shifting of aggregate demand (AD) curve. Discuss the effect of increasing these variables to the aggregate demand. Use graphical approach to demonstrate the effect of increasing of each variable and explain why the AD curve shifted. a. Interest rate (domestic) b. Government expenditure (domestic) plzz explain it1. State whether each of the following transactions is a part of aggregate demand in the United States, and if so whether it is Consumption spending, Investment, Government purchase, Exports, or IMPORTS For example, "Dieter, a German resident, buys frozen chickens that were raised in the U.S." Answer: No, IMPORTS a) David buys a keyboard synthesizer made in the United States. b) A Japanese automaker buys stock in an American auto company. c) A Japanese automaker builds an assembly plant in Illinois. d) Will buys a compact disc player made in Japan. e) The U.S government sends an insurance check to Renee, an unemployed keypunch operator. f) Mark buys a three-year-old used car. g) The state government sends a salary check to Karen, an economics instructor at CUNY.please draw graph specify endpoints thanks 1 The table below shows the aggregate demand for the economy of Itera. Its potential GDP (LAS) is $725. Price Index Aggregate Quantity Demanded 70 725 90 675 110 625 130 575 a. Draw the aggregate demand curve and the potential GDP (LAS) curve in the graphing area below. Plot only curve in the graphing area using the appropriate tool. Once all points have been plotted, click on the line (not tool icon will pop up. You can use this to enter exact co-ordinates for your points as needed. for the economy of Itera AS Tools 120 AD (900, 120) Potential GDP 110 100 AD2 90 80 70 400 500 600 700 800 900 Real GDP b. The equilibrium level of GDP is $ and the price index is c. There is a recessionary v gap in Itera of $ d. If aggregate demand in Itera were to increase by $150, draw the new (AD2) curve in the graphing area above. Remember to only the endpoints of the curve. e. The new equilibrium level of GDP is $ and the price index is f. Now there is…
- Match each definition to the appropriate component of aggregate demand. Definition The sum of the expenditures of business firms on new plant, equipment, and software and of households on new homes The goods and services purchased by all levels of government The total amount spent by consumers on newly produced goods and services The difference between exports and imports ⒸNet exports O Government spending Consumer Expenditure Which of the following components represents the largest piece of aggregate demand? O Consumer expenditure O Investment spending O Which of the following components represents the smallest piece of aggregate demand? O Consumer expenditure O Government spending O Investment spending ONet exports Investment Spending Government Spending Net Exports O O O OWhat are the factors other than price that can shift aggregate demand curve interms of investment and consumption? Also explain graphically.Create a graph for an aggregate demand curve. Use the variable ‘Price Level’ for the vertical axis and ‘Real GDP’ for the horizontal axis. In your answer, explain why there is an inverse relationship between the price level and real GDP. Use your graph to illustrate your explanations. Also, discuss determinants of Aggregate Demandor factors that shift Aggregate Demand curve.
- The following are variables that may cause shifting of aggregate demand (AD) curve. Discuss the effect of increasing these variables to the aggregate demand. Use graphical approach to demonstrate the effect of increasing of each variable and explain why the AD curve shifted. a) Government expenditure (domestic)QUESTION 1 Aggregate Demand (AD) Is drawn with price level, average price for everything in the economy relative to the base year price, (not the dollar price) on the vertical axis and Real GDP demanded on the horizontal axis. Use the numbers from the following table and calculate the Real GDP Demanded using expenditure approach of GDP, and plot all the points on the Aggregate Demand. Connect all the points to draw the aggregate demand. [Review Chapter 5 powerpoints, textbook and Internet source to find what numbers have tolbe added to get each of the points In the Aggregate Demand curve.] (国 Real GDP Demanded (AD): C+l+G+ (X-M) Real GDP Supplied: Ageregate Supply (AS) $680 Price Level 110 $400 $185 $150 $55 $50 115 390 180 150 50 50 720 120 380 175 150 45 50 750 125 370 170 150 40 50 780 130 360 165 150 35 50 810 8.4. Determinants of aggregate demand The graph below is associated with a hypothetical country. Consider an increase in aggregate demand (AD). Specifically, aggregate demand shifts to the right from AD, to AD,, causing the quantity of output demanded to rise at each price level. For instance, at a price level of 140, output is now $400 billion, where initially it was $300 billion PRICE LEVEL 170 160 130 130 120 110 100 8 0 II 200 100 II II II I I 100 300 400 OUTPUT (Billions of dollars) AD₁ 600 700 800 The following table lists several determinants of aggregate demand. (2)
- Question 1 Equilibrium in the goods market exists when production, Y, is equal to the demand forgoods, Z.Explain the determination of equilibrium output in the goods market, use relevantalgebra and graphs.Your discussion should include the following concepts• Consumption Spending• Investment Spending• Government spendingQuestion 1. Explain why the Aggregate Demand curve is downward sloping . 2. Explain why the Aggregate Supply curve is upward sloping . 3. What determines potential output Yf, and how can the economy exceed Yf in the short run? 4. Explain the Equilibrium condition of Aggregate Expenditure= output Y. How are inventory changes related to AE and Y? 5. Define the multiplier and the marginal propensities to consume (MPC) and save (MPS). What is the relationship between the MPC and the multiplier? 6. Compare and contrast the short run Keynesian and long run Neoclassical views of the aggregate supply and Phillips curves 7. For each the following economies, calculate equilibrium Y*, the multiplier, and the size of the recessionary or inflationary gap, if any. a. AE= 250 +.75 Y Yf= 1200 b. AE= 400+ .9 Y Yf= 3000 c. AE= 300 +. 8Y Yf=1500 d. AE= 300+ .67 Y Yf=10004. Determinants of aggregate demand The graph below is associated with a hypothetical country. Consider an increase in aggregate demand (AD). Specifically, aggregate demand shifts to the right from AD₁ to AD2, causing the quantity of output demanded to rise at each price level. For instance, at a price level of 140, output is now $400 billion, where initially it was $300 billion. PRICE LEVEL 170 160 150 140 130 120 110 100 90 AD 2 AD1 ?