Homework Clinic
Social Science Clinic => Economics => Topic started by: craiczarry on May 25, 2020
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Question 1
As the price level in the economy rises, which of the following occurs?
◦ The quantity of 'real money' decreases.
◦ Real aggregate demand decreases.
◦ Total spending in money terms decreases.
◦ A and B
◦ B and C
Question 2
Which one of the following does NOT explain why the AD curve slopes downwards?
◦ As the price level falls, people will save more in order to protect the real value of their savings.
◦ A lower price level increases the competitiveness of the country's exports.
◦ A lower price level increases the real money supply.
◦ A lower price level increases the relative price of imports.
◦ As the price level falls, the real value of money balances held increases. This increases the real purchasing power of consumers.
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Answer 1
A and B
Answer 2
As the price level falls, people will save more in order to protect the real value of their savings.
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thank you