Exploring Macroeconomics
8th Edition
ISBN: 9781544337722
Author: Robert L. Sexton
Publisher: SAGE Publications, Inc
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Question
Chapter 15, Problem 14P
To determine
To explain:
The reason behind the upward shifting of both aggregate expenditure function and the aggregate
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Students have asked these similar questions
Why do the aggregate expenditure function and the aggregate demand curve both shift upward at the same time?
What is the difference between a movement along the aggregate demand curve and a shift of the aggregate demand curve?
"The demand curves for all products have
negative slopes. For instance, the demand
curves for milk,automobiles, personal
computers, and shirts all have negative
slopes. Therefore, because the aggregate
demand curve shows the demand for all
products, it too must have a negative slope. "
Comment on this assertion.
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Similar questions
- What are the determinants of the Consumption element of Aggregate Demand?  It’s crucial to explain and use examples please!arrow_forwardWhat does an aggregated demand curve look like?arrow_forwardDraw the graph (aggregate supply and aggregate demand curves) of an economy that is in equilibrium.arrow_forward
- What is income-expenditure equilibrium? Derive aggregate demand curve from income expenditure equilibrium when the price level is not changed.arrow_forwardWhy does the economy's aggregate demand curve have a negative slope?arrow_forwardThe following graph shows the short-run and long-run aggregate supply curves (SRAS and LRAS) for an economy. Suppose there is a technological improvement that allows firms to reduce their costs of production permanently. Drag one or both of the curves on the graph to illustrate the long-term effects of this change. If you don't believe there will be any long-term effects, leave the curves where they are. 240 LRAS SRAS 200 SRAS 160 LRAS 120 80 40 6 12 18 24 REAL GDP (Trillions of dollars) Assuming aggregate demand is not affected by the technological improvement, the long-run effect of this v supply shock is v in aggregate output and v in the price level. PRICE LEVELarrow_forward
- The determinants of aggregate demand explain shifts in the aggregate demand curve. How does a change in investment spending affect aggregate demand? Asaparrow_forwardConsidering the formula for Aggregate Demand (Also known as the product market) answer the following question:Name two macroeconomic variables (from this formula) that decline when the economy goes into recession, and explain why this happens?Name one macroeconomic variable (from this formula) that rises during a recession, and explain why this happens?arrow_forwardwill an increase in productivity affect the aggregate supply curve and the aggregate demand curve?arrow_forward
- The following graph shows a decrease in aggregate demand (AD) in a hypothetical country. Specifically, aggregate demand shifts to the left from AD1AD1 to AD2AD2, causing the quantity of output demanded to fall at all price levels. For example, at a price level of 140, output is now $200 billion, where previously it was $300 billion. The following table lists several determinants of aggregate demand. Complete the table by indicating the change in each determinant necessary to decrease aggregate demand. Change needed to decrease AD Wealth (increase/ decrease) Taxes (increase/ decrease) Expected rate of return on investment (increase/ decrease) Incomes in other countries (increase/ decrease)arrow_forwardExplain the factors that cause the Aggregate Demand curve to be downward sloping left to right.arrow_forwardClassify each factor according to whether it is associated with a movement along the aggregate demand curve or a shift of the aggregate demand curve.arrow_forward
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