The impact on aggregate demand .

Question

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Answer 1

Question

Chapter 17, Problem 1CYU

a)

To determine

The impact on aggregate demand.

a)

Expert Solution

Explanation of Solution

An increase in the interest rate due to monetary policy encourages people to save more and consume less because they are getting higher returns on their savings. When people have less income on their hands, the spending on consumer goods decreases and causes the aggregate demand in the market to fall, leading to a leftward shift in the aggregate demand curve.

Economics Concept Introduction

The aggregate demand curve represents the relationship between the price level and aggregate quantity demanded by households, firms, the government, and foreign nations.

A change in aggregate price level while keeping other factors constant causes a movement along the aggregate demand curve.

Aggregate demand curve shifts due to the following changes:

Changes in expectations
Changes in wealth
Change in the size of the existing stock of physical capital
When government policies change.

b)

To determine

The impact on aggregate demand.

b)

Expert Solution

Explanation of Solution

A fall in the value of money causes an upward movement along the aggregate demand curve. It doesn’t shift the demand curve.

c)

To determine

The impact on aggregate demand.

c)

Expert Solution

Explanation of Solution

News of a worse expected situation in the job market lowers the aggregate demand in the market and thus causes a leftward shift in the aggregate demand curve.

d)

To determine

The impact on aggregate demand.

d)

Expert Solution

Explanation of Solution

A fall in tax rate represents the expansionary fiscal policy, leading to higher aggregate demand because a lower tax rate reflects a higher disposable income. When people have high disposable income in their hands, the spending on consumer goods increases and causes the aggregate demand in the market to increase, leading to a rightward shift in the aggregate demand curve.

e)

To determine

The impact on aggregate demand.

e)

Expert Solution

Explanation of Solution

An increase in the value of assets due to a fall in the aggregate price level causes a downward movement along the aggregate demand curve. It doesn’t shift the demand curve.

f)

To determine

The impact on aggregate demand.

f)

Expert Solution

Explanation of Solution

An increase in the actual value of assets due to a surge in real estate causes the aggregate demand to expand in the market because a higher value of assets representing the higher purchasing power individuals has in their hands. Thus, people demand more goods and services, and the aggregate demand curve shifts to the right.

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Answer 2

Question

Chapter 17, Problem 1CYU

a)

To determine

The impact on aggregate demand.

a)

Expert Solution

Explanation of Solution

An increase in the interest rate due to monetary policy encourages people to save more and consume less because they are getting higher returns on their savings. When people have less income on their hands, the spending on consumer goods decreases and causes the aggregate demand in the market to fall, leading to a leftward shift in the aggregate demand curve.

Economics Concept Introduction

The aggregate demand curve represents the relationship between the price level and aggregate quantity demanded by households, firms, the government, and foreign nations.

A change in aggregate price level while keeping other factors constant causes a movement along the aggregate demand curve.

Aggregate demand curve shifts due to the following changes:

Changes in expectations
Changes in wealth
Change in the size of the existing stock of physical capital
When government policies change.

b)

To determine

The impact on aggregate demand.

b)

Expert Solution

Explanation of Solution

A fall in the value of money causes an upward movement along the aggregate demand curve. It doesn’t shift the demand curve.

c)

To determine

The impact on aggregate demand.

c)

Expert Solution

Explanation of Solution

News of a worse expected situation in the job market lowers the aggregate demand in the market and thus causes a leftward shift in the aggregate demand curve.

d)

To determine

The impact on aggregate demand.

d)

Expert Solution

Explanation of Solution

A fall in tax rate represents the expansionary fiscal policy, leading to higher aggregate demand because a lower tax rate reflects a higher disposable income. When people have high disposable income in their hands, the spending on consumer goods increases and causes the aggregate demand in the market to increase, leading to a rightward shift in the aggregate demand curve.

e)

To determine

The impact on aggregate demand.

e)

Expert Solution

Explanation of Solution

An increase in the value of assets due to a fall in the aggregate price level causes a downward movement along the aggregate demand curve. It doesn’t shift the demand curve.

f)

To determine

The impact on aggregate demand.

f)

Expert Solution

Explanation of Solution

An increase in the actual value of assets due to a surge in real estate causes the aggregate demand to expand in the market because a higher value of assets representing the higher purchasing power individuals has in their hands. Thus, people demand more goods and services, and the aggregate demand curve shifts to the right.

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Answer 3

Question

Chapter 17, Problem 1CYU

a)

To determine

The impact on aggregate demand.

a)

Expert Solution

Explanation of Solution

An increase in the interest rate due to monetary policy encourages people to save more and consume less because they are getting higher returns on their savings. When people have less income on their hands, the spending on consumer goods decreases and causes the aggregate demand in the market to fall, leading to a leftward shift in the aggregate demand curve.

Economics Concept Introduction

The aggregate demand curve represents the relationship between the price level and aggregate quantity demanded by households, firms, the government, and foreign nations.

A change in aggregate price level while keeping other factors constant causes a movement along the aggregate demand curve.

Aggregate demand curve shifts due to the following changes:

Changes in expectations
Changes in wealth
Change in the size of the existing stock of physical capital
When government policies change.

b)

To determine

The impact on aggregate demand.

b)

Expert Solution

Explanation of Solution

A fall in the value of money causes an upward movement along the aggregate demand curve. It doesn’t shift the demand curve.

c)

To determine

The impact on aggregate demand.

c)

Expert Solution

Explanation of Solution

News of a worse expected situation in the job market lowers the aggregate demand in the market and thus causes a leftward shift in the aggregate demand curve.

d)

To determine

The impact on aggregate demand.

d)

Expert Solution

Explanation of Solution

A fall in tax rate represents the expansionary fiscal policy, leading to higher aggregate demand because a lower tax rate reflects a higher disposable income. When people have high disposable income in their hands, the spending on consumer goods increases and causes the aggregate demand in the market to increase, leading to a rightward shift in the aggregate demand curve.

e)

To determine

The impact on aggregate demand.

e)

Expert Solution

Explanation of Solution

An increase in the value of assets due to a fall in the aggregate price level causes a downward movement along the aggregate demand curve. It doesn’t shift the demand curve.

f)

To determine

The impact on aggregate demand.

f)

Expert Solution

Explanation of Solution

An increase in the actual value of assets due to a surge in real estate causes the aggregate demand to expand in the market because a higher value of assets representing the higher purchasing power individuals has in their hands. Thus, people demand more goods and services, and the aggregate demand curve shifts to the right.

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Answer 4

Question

Chapter 17, Problem 1CYU

a)

To determine

The impact on aggregate demand.

a)

Expert Solution

Explanation of Solution

An increase in the interest rate due to monetary policy encourages people to save more and consume less because they are getting higher returns on their savings. When people have less income on their hands, the spending on consumer goods decreases and causes the aggregate demand in the market to fall, leading to a leftward shift in the aggregate demand curve.

Economics Concept Introduction

The aggregate demand curve represents the relationship between the price level and aggregate quantity demanded by households, firms, the government, and foreign nations.

A change in aggregate price level while keeping other factors constant causes a movement along the aggregate demand curve.

Aggregate demand curve shifts due to the following changes:

Changes in expectations
Changes in wealth
Change in the size of the existing stock of physical capital
When government policies change.

b)

To determine

The impact on aggregate demand.

b)

Expert Solution

Explanation of Solution

A fall in the value of money causes an upward movement along the aggregate demand curve. It doesn’t shift the demand curve.

c)

To determine

The impact on aggregate demand.

c)

Expert Solution

Explanation of Solution

News of a worse expected situation in the job market lowers the aggregate demand in the market and thus causes a leftward shift in the aggregate demand curve.

d)

To determine

The impact on aggregate demand.

d)

Expert Solution

Explanation of Solution

A fall in tax rate represents the expansionary fiscal policy, leading to higher aggregate demand because a lower tax rate reflects a higher disposable income. When people have high disposable income in their hands, the spending on consumer goods increases and causes the aggregate demand in the market to increase, leading to a rightward shift in the aggregate demand curve.

e)

To determine

The impact on aggregate demand.

e)

Expert Solution

Explanation of Solution

An increase in the value of assets due to a fall in the aggregate price level causes a downward movement along the aggregate demand curve. It doesn’t shift the demand curve.

f)

To determine

The impact on aggregate demand.

f)

Expert Solution

Explanation of Solution

An increase in the actual value of assets due to a surge in real estate causes the aggregate demand to expand in the market because a higher value of assets representing the higher purchasing power individuals has in their hands. Thus, people demand more goods and services, and the aggregate demand curve shifts to the right.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 17, Problem 1CYU

a)

To determine

The impact on aggregate demand.

a)

Expert Solution

Explanation of Solution

An increase in the interest rate due to monetary policy encourages people to save more and consume less because they are getting higher returns on their savings. When people have less income on their hands, the spending on consumer goods decreases and causes the aggregate demand in the market to fall, leading to a leftward shift in the aggregate demand curve.

Economics Concept Introduction

The aggregate demand curve represents the relationship between the price level and aggregate quantity demanded by households, firms, the government, and foreign nations.

A change in aggregate price level while keeping other factors constant causes a movement along the aggregate demand curve.

Aggregate demand curve shifts due to the following changes:

Changes in expectations
Changes in wealth
Change in the size of the existing stock of physical capital
When government policies change.

b)

To determine

The impact on aggregate demand.

b)

Expert Solution

Explanation of Solution

A fall in the value of money causes an upward movement along the aggregate demand curve. It doesn’t shift the demand curve.

c)

To determine

The impact on aggregate demand.

c)

Expert Solution

Explanation of Solution

News of a worse expected situation in the job market lowers the aggregate demand in the market and thus causes a leftward shift in the aggregate demand curve.

d)

To determine

The impact on aggregate demand.

d)

Expert Solution

Explanation of Solution

A fall in tax rate represents the expansionary fiscal policy, leading to higher aggregate demand because a lower tax rate reflects a higher disposable income. When people have high disposable income in their hands, the spending on consumer goods increases and causes the aggregate demand in the market to increase, leading to a rightward shift in the aggregate demand curve.

e)

To determine

The impact on aggregate demand.

e)

Expert Solution

Explanation of Solution

An increase in the value of assets due to a fall in the aggregate price level causes a downward movement along the aggregate demand curve. It doesn’t shift the demand curve.

f)

To determine

The impact on aggregate demand.

f)

Expert Solution

Explanation of Solution

An increase in the actual value of assets due to a surge in real estate causes the aggregate demand to expand in the market because a higher value of assets representing the higher purchasing power individuals has in their hands. Thus, people demand more goods and services, and the aggregate demand curve shifts to the right.

Answer 6

Chapter 17, Problem 1CYU

a)

To determine

The impact on aggregate demand.

a)

Expert Solution

Explanation of Solution

An increase in the interest rate due to monetary policy encourages people to save more and consume less because they are getting higher returns on their savings. When people have less income on their hands, the spending on consumer goods decreases and causes the aggregate demand in the market to fall, leading to a leftward shift in the aggregate demand curve.

Economics Concept Introduction

The aggregate demand curve represents the relationship between the price level and aggregate quantity demanded by households, firms, the government, and foreign nations.

A change in aggregate price level while keeping other factors constant causes a movement along the aggregate demand curve.

Aggregate demand curve shifts due to the following changes:

Changes in expectations
Changes in wealth
Change in the size of the existing stock of physical capital
When government policies change.

Answer 7

Chapter 17, Problem 1CYU

a)

To determine

The impact on aggregate demand.

Answer 8

a)

Expert Solution

Explanation of Solution

An increase in the interest rate due to monetary policy encourages people to save more and consume less because they are getting higher returns on their savings. When people have less income on their hands, the spending on consumer goods decreases and causes the aggregate demand in the market to fall, leading to a leftward shift in the aggregate demand curve.

Answer 9

a)

Expert Solution

Answer 10

a)

Expert Solution

Answer 11

Expert Solution

Answer 12

Economics Concept Introduction

The aggregate demand curve represents the relationship between the price level and aggregate quantity demanded by households, firms, the government, and foreign nations.

A change in aggregate price level while keeping other factors constant causes a movement along the aggregate demand curve.

Aggregate demand curve shifts due to the following changes:

Changes in expectations
Changes in wealth
Change in the size of the existing stock of physical capital
When government policies change.

Answer 13

b)

To determine

The impact on aggregate demand.

b)

Expert Solution

Explanation of Solution

A fall in the value of money causes an upward movement along the aggregate demand curve. It doesn’t shift the demand curve.

Answer 14

b)

To determine

The impact on aggregate demand.

Answer 15

b)

Expert Solution

Explanation of Solution

A fall in the value of money causes an upward movement along the aggregate demand curve. It doesn’t shift the demand curve.

Answer 16

b)

Expert Solution

Answer 17

b)

Expert Solution

Answer 18

Expert Solution

Answer 19

c)

To determine

The impact on aggregate demand.

c)

Expert Solution

Explanation of Solution

News of a worse expected situation in the job market lowers the aggregate demand in the market and thus causes a leftward shift in the aggregate demand curve.

Answer 20

c)

To determine

The impact on aggregate demand.

Answer 21

c)

Expert Solution

Explanation of Solution

News of a worse expected situation in the job market lowers the aggregate demand in the market and thus causes a leftward shift in the aggregate demand curve.

Answer 22

c)

Expert Solution

Answer 23

c)

Expert Solution

Answer 24

Expert Solution

Answer 25

d)

To determine

The impact on aggregate demand.

d)

Expert Solution

Explanation of Solution

A fall in tax rate represents the expansionary fiscal policy, leading to higher aggregate demand because a lower tax rate reflects a higher disposable income. When people have high disposable income in their hands, the spending on consumer goods increases and causes the aggregate demand in the market to increase, leading to a rightward shift in the aggregate demand curve.

Answer 26

d)

To determine

The impact on aggregate demand.

Answer 27

d)

Expert Solution

Explanation of Solution

A fall in tax rate represents the expansionary fiscal policy, leading to higher aggregate demand because a lower tax rate reflects a higher disposable income. When people have high disposable income in their hands, the spending on consumer goods increases and causes the aggregate demand in the market to increase, leading to a rightward shift in the aggregate demand curve.

Answer 28

d)

Expert Solution

Answer 29

d)

Expert Solution

Answer 30

Expert Solution

Answer 31

e)

To determine

The impact on aggregate demand.

e)

Expert Solution

Explanation of Solution

An increase in the value of assets due to a fall in the aggregate price level causes a downward movement along the aggregate demand curve. It doesn’t shift the demand curve.

Answer 32

e)

To determine

The impact on aggregate demand.

Answer 33

e)

Expert Solution

Explanation of Solution

An increase in the value of assets due to a fall in the aggregate price level causes a downward movement along the aggregate demand curve. It doesn’t shift the demand curve.

Answer 34

e)

Expert Solution

Answer 35

e)

Expert Solution

Answer 36

Expert Solution

Answer 37

f)

To determine

The impact on aggregate demand.

f)

Expert Solution

Explanation of Solution

An increase in the actual value of assets due to a surge in real estate causes the aggregate demand to expand in the market because a higher value of assets representing the higher purchasing power individuals has in their hands. Thus, people demand more goods and services, and the aggregate demand curve shifts to the right.

Answer 38

f)

To determine

The impact on aggregate demand.

Answer 39

f)

Expert Solution

Explanation of Solution

An increase in the actual value of assets due to a surge in real estate causes the aggregate demand to expand in the market because a higher value of assets representing the higher purchasing power individuals has in their hands. Thus, people demand more goods and services, and the aggregate demand curve shifts to the right.