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Author Question: When the price level declines A) the interest rate falls, and consumers borrow more funds, which ... (Read 65 times)

Jipu 123

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on: Jun 30, 2018
When the price level declines
 
  A) the interest rate falls, and consumers borrow more funds, which causes a movement down along the aggregate demand curve.
  B) interest rates fall, and consumers borrow more funds, which causes the aggregate demand curve to shift to the left.
  C) the interest rate rises, and consumers borrow fewer funds, which causes a movement up the aggregate demand curve.
  D) the interest rate is not affected, so there is no movement along the aggregate demand curve.

Question 2

The level of employment in an economy determines its real GDP, other things held constant. Do you agree or disagree? Why? What assumptions are necessary for your conclusion based on the classical model?
 
  What will be an ideal response?


xMRAZ

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Reply #1 on: Jun 30, 2018
Answer to Question 1

A

Answer to Question 2

Agree. Production requires workers so the more workers that are employed the greater total production. This assumes that workers who are employed actually work and are productive.


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