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 20 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?

Before a vaccine is licensed in the USA, the Food and Drug Administration (FDA) reviews it for safety and effectiveness. The CDC then reviews all studies again, as well as the American Academy of Pediatrics and the American Academy of Family Physicians. Every lot of vaccine is tested before administration to the public, and the FDA regularly inspects vaccine manufacturers' facilities.

Did you know?

Approximately 70% of expectant mothers report experiencing some symptoms of morning sickness during the first trimester of pregnancy.

Did you know?

When Gabriel Fahrenheit invented the first mercury thermometer, he called "zero degrees" the lowest temperature he was able to attain with a mixture of ice and salt. For the upper point of his scale, he used 96°, which he measured as normal human body temperature (we know it to be 98.6° today because of more accurate thermometers).

Did you know?

The Romans did not use numerals to indicate fractions but instead used words to indicate parts of a whole.

Did you know?

Side effects from substance abuse include nausea, dehydration, reduced productivitiy, and dependence. Though these effects usually worsen over time, the constant need for the substance often overcomes rational thinking.

The adolescent growth spurt in humans is seen as a “bump” in the height curve and a “spike” in the h The adolescent growth spurt in humans is seen as a “bump” in the height curve and a “spike” in the h
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 ...
Downward movement of the piston lowers the air pressure inside the combustion chamber. The pressure ... Downward movement of the piston lowers the air pressure inside the combustion chamber. The pressure ...
Linear dose-response curve Linear dose-response curve
Slope Formula Slope Formula
Construct a Lorenz curve that shows income distribution in this society. Construct a Lorenz curve that shows income distribution in this society.
Video: Prone Position

For a complete list of videos, visit our video library