(a)
To explain:
The effect on aggregate
Answer to Problem 1P
When the export increases, the aggregate demand also increases.
Explanation of Solution
When the exports increases, it represents the increase in demand forgoods in the foreign market. Therefore, the increased demand leads to an increase in aggregate demand.
Aggregate demand:
It represents the total goods and services that are demanded at a given point of time. As the
(b)
To explain:
The effect on aggregate demand, if both import and export decreases provided other thingsbeing equal.
Answer to Problem 1P
The effect will be intermediate on the aggregate demand, if both the exports and imports decreases.
Explanation of Solution
The aggregate demand increases with an increase in export while it decreases with the increase in import.In this case,both of them are decreasing.Thus, the change will depend upon the export or import whichever is more intense.
Aggregate demand:
It represents the total goods and services that are demanded at a given point of time. As the price level and gross domestic product demand share an inverse relationship, the demand curve slopes downwards when the price becomes high.
(c)
To explain:
The effect on aggregate demand, if consumption decreases provided other thingsbeing equal.
Answer to Problem 1P
The aggregate demand will increase with an increase in consumption.
Explanation of Solution
The aggregate demand will raise with the increase in consumption of goods and services. More will be the consumption of products, more will be the demand.
Aggregate demand:
It represents the total goods and services that are demanded at a given point of time. As the price level and gross domestic product demand share an inverse relationship, the demand curve slopes downwards when the price becomes high.
(d)
To explain:
The effect on aggregate demand, if investment increases provided other things being equal.
Answer to Problem 1P
The increase in investment will increase the aggregate demand.
Explanation of Solution
The aggregate demand will increase with the increase in investment in capital goods. Investment made in new technology, building new infrastructure, purchasing new machines would lead to an increase in the income of the people.Thus, the
Aggregate demand:
It represents the total goods and services that are demanded at a given point of time. As the price level and gross domestic product demand share an inverse relationship, the demand curve slopes downwards when the price becomes high.
(e)
To explain:
The effect on aggregate demand, if investment decreases and government purchase increase provided other thingsbeing equal.
Answer to Problem 1P
If the investment decreases and the government purchase increases, the effect on aggregate demand will be intermediate.
Explanation of Solution
The decrease in investment leads to fall in demand, whereas, the increase in government purchases lead to increase in demand.The change in aggregate demand will depend upon the intensity, accordingly the aggregate demand will shift towards left or right.
Aggregate demand:
It represents the total goods and services that are demanded at a given point of time. As the price level and gross domestic product demand share an inverse relationship, the demand curve slopes downwards when the price becomes high.
(f)
To explain:
The effect on aggregate demand, if the price increases provided other thingsbeing equal.
Answer to Problem 1P
If the price level increases, there will be a decrease in the aggregate demand.
Explanation of Solution
The increase intheprice level will decrease the purchasing power of the consumers. This will lead to fall in the value of currency, decreasing the aggregate demand.
Aggregate demand:
It represents the total goods and services that are demanded at a given point of time. As the price level and gross domestic product demand share an inverse relationship, the demand curve slopes downwards when the price becomes high.
(g)
To explain:
The effect on aggregate demand, if the price level decreases provided other thingsbeing equal.
Answer to Problem 1P
The aggregate demand will increase with a decrease in the price level.
Explanation of Solution
The decrease in the price level increases the purchasing power of the consumers.Thus, it will increase the demand forgoods and services.
Aggregate demand:
It represents the total goods and services that are demanded at a given point of time. As the price level and gross domestic product demand share an inverse relationship, the demand curve slopes downwards when the price becomes high.
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Chapter 22 Solutions
EXPLORING ECON.-W/ACCESS (LL) >CUSTOM<
- Consider the table on the right, which shows the various revenue concepts for a perfectly competitive firm. Suppose the firm faces a constant market price of $4. Compute first total revenue for each level of output and fill in the TR column of the table. Next, compute marginal revenue for each level of output and fill in the MR column of the table. (Marginal revenue at each level of output is computed using total revenue for two successive levels of output. For example, marginal revenue at 160 uses total revenue for output levels 120 and 160.) Total Marginal Price (p)Quantity (Q) Revenue (TR)Revenue (MR) $4 A EA 120 $4 160 $4 200 $4 240 $4 280 $ EA EA EA 10 S คarrow_forwardThis week we will be discussing measures of economic well-being. Read the following short article from the Office of National Statistics from the U.K. which discusses different measures of economic well-being: https://blog.ons.gov.uk/2017/07/06/beyond-gdp-measuring-the-economic-well-being-of-individuals/ For this assignment, we will narrow down to the economic well-being of the St. Louis region (or another region you choose). As the article indicates there are different measures of well-being. You are interested in creating a Hypothesis Test about the economic well-being of the area. Discuss the following issues: First, think about your research hypothesis and justify it briefly. Remember, a hypothesis is a well-thought and untested proposition. What is the null hypothesis? What is the parameter you are interested in? (i.e., the measure of well-being). Is it going to be a Lower-Tail, Upper-Tail or Two-Tailed test? What is the data that you need and how will you collect the data? What…arrow_forwardJohnny brought $39.50 to the art supply store. He bought a brush, a sketchbook, and a paint set. The brush was 1 6 as much as the sketchbook, and the sketchbook cost 3 4 the cost of the paint set. Johnny had $2.00 left over after buying these items.arrow_forward
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