This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: Why does the aggregate demand curve slope downward? What will be an ideal ... (Read 92 times)

wrbasek0

  • Hero Member
  • *****
  • Posts: 560
on: Jun 29, 2018
Why does the aggregate demand curve slope downward?
 
  What will be an ideal response?

Question 2

Refer to Figure 7-1. At the market equilibrium, the deadweight loss is equal to
 
  A) 0. B) 250,000. C) 500,000. D) 1,000,000.


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

djpooyouma

  • Sr. Member
  • ****
  • Posts: 325
Reply #1 on: Jun 29, 2018
Answer to Question 1

The aggregate demand curve slopes downward because of the wealth effect and two substitution effects. First, a rise in the price level decreases real wealth, which brings an increase in saving and a decrease in spendingthe wealth effect. Second, a rise in the price level raises the interest rate, which decreases borrowing and spendingan intertemporal substitution effect as people decrease current spending in favor of future spendingand increases the price of domestic goods and services relative to foreign goods and services, which decreases exports and increases importsan international substitution effect.

Answer to Question 2

C


wrbasek0

  • Hero Member
  • *****
  • Posts: 560
Reply #2 on: Jun 29, 2018
Correct answers!


djpooyouma

  • Sr. Member
  • ****
  • Posts: 325
Reply #3 on: Jun 29, 2018
Great! Please up vote :D


« previous next »
 

Did you know?

If you use artificial sweeteners, such as cyclamates, your eyes may be more sensitive to light. Other factors that will make your eyes more sensitive to light include use of antibiotics, oral contraceptives, hypertension medications, diuretics, and antidiabetic medications.

Did you know?

Though Candida and Aspergillus species are the most common fungal pathogens causing invasive fungal disease in the immunocompromised, infections due to previously uncommon hyaline and dematiaceous filamentous fungi are occurring more often today. Rare fungal infections, once accurately diagnosed, may require surgical debridement, immunotherapy, and newer antifungals used singly or in combination with older antifungals, on a case-by-case basis.

Did you know?

In women, pharmacodynamic differences include increased sensitivity to (and increased effectiveness of) beta-blockers, opioids, selective serotonin reuptake inhibitors, and typical antipsychotics.

Did you know?

Studies show that systolic blood pressure can be significantly lowered by taking statins. In fact, the higher the patient's baseline blood pressure, the greater the effect of statins on his or her blood pressure.

Did you know?

Elderly adults are at greatest risk of stroke and myocardial infarction and have the most to gain from prophylaxis. Patients ages 60 to 80 years with blood pressures above 160/90 mm Hg should benefit from antihypertensive treatment.

The titration curve of the buffer acetic acid (CH3COOH) The titration curve of the buffer acetic acid (CH3COOH)
Frequency distribution curve: interpatient variability in drug response. Frequency distribution curve: interpatient variability in drug response.
The downward movement of the piston draws the air–fuel mixture into the cylinder through the ... The downward movement of the piston draws the air–fuel mixture into the cylinder through the ...
The adsorption spectrum of rhodopsin compared with the human scotopic spectral sensitivity curve. The adsorption spectrum of rhodopsin compared with the human scotopic spectral sensitivity curve.
How to find the slope of a line using any two points How to find the slope of a line using any two points
Titration curve for the tetrapeptide Glu-Gly-Ala-Lys Titration curve for the tetrapeptide Glu-Gly-Ala-Lys
Video: Angiotensin II - kidneys, adrenal glands and dehydration

For a complete list of videos, visit our video library