3. Because of the slope of the aggregate demand curve, we can say thatA) a decrease in the price level leads to a lower level of real GDP demanded.B) an increase in the price level leads to no change in the level of real GDP demanded.C) a decrease in the price level leads to a higher level of real GDP demanded.D) an increase in the price level leads to a higher level of real GDP demanded.4. Which of the following best describes the "wealth effect"?A) When the price level falls, the real value of household wealth falls.B) When the price level falls, the nominal value of household wealth falls.C) When the price level falls, the nominal value of household wealth rises.D) When the price level falls, the real value of household wealth rises.

3. Aggregate demand curve refers to the graphical representation of total output demanded by the…

Answered: 3. Because of the slope of the…

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter8: Macroeconomic Equilibrium: Aggregate Demand And Supply

Section: Chapter Questions

Problem 11E

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3. Why the aggregate demand curve slopes downward The following graph shows the aggregate demand (AD) curve in a hypothetical economy. At point A, the price level is 140, and the quantity of output demanded is $300 billion. Moving down along the aggregate demand curve from point A to point B, the price level falls to 120, and the quantity of output demanded rises to $500 billion. O PRICE LEVEL 170 100 150 140 130 120 110 100+ 8 90 0 100 B 200 300 400 500 OUTPUT (Billions of dollars) AD 600 700 800
1. How is the aggregate demand curve different from the demand curve for a single good, like hamburgers? 2. Why does the aggregate demand curve slope downward? 3. How does an increase in foreign income affect domestic aggregate expenditures and demand? 4. How does a decrease in foreign price levels affect domestic aggregate expenditures and demand? 5. How is the aggregate supply curve different from the supply curve for a single good, like pizza?
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4. Equilibrium The following table shows the real output demanded and supplied at various price levels in a hypothetical economy. Real Output Demanded (Billions of dollars) 10 20 30 50 80 Price Level (Index number) 160 120 80 40 20 Real Output Supplied (Billions of dollars) 85 80 70 50 20 On the following graph, use the blue points (circle symbol) to plot the aggregate demand (Initial AD) curve for the economy. Then use the orange points (square symbol) to plot the aggregate supply (AS) curve for the economy.
Why the aggregate demands curve slopes downward
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The following graph shows the aggregate demand (AD) curve in a hypothetical economy. At point A, the price level is 140, and the quantity of output demanded is $300 billion. Moving down along the aggregate demand curve from point A to point B, the price level falls to 120, and the quantity of output demanded rises to $500 billion. 170 A O PRICE LEVEL 160 150 140 120 110 100 B AD C
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2. How does each of the following affect the aggregate demand curve? a. Government spending increases. b. The amount of taxes collected decreases.
Which of the following is not a reason for the downward slope of the aggregate demand curve? As the price level decreases, the quantity demanded of real GDP increases. O As the price level decreases, American products are more attractive than imports, so their aggregate quantity increases. O As the price level decreases, the purchasing power of dollar decreases, so aggregate demand increases. O As the price level decreases, interest rates decrease, so consumption increases.
Q.No.5. How the aggregate demand and changes in aggregate demand curves can be drawn graphically. Also illustrate the reasons of:A downward slope of aggregate demand curveB changes in aggregate demand

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