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Author Question: What is the relationship between the aggregate planned expenditure curve and the aggregate demand ... (Read 85 times)

shofmannx20

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on: Jun 29, 2018
What is the relationship between the aggregate planned expenditure curve and the aggregate demand curve? Explain the relationshi
 
  What will be an ideal response?

Question 2

In the loanable funds market, if the real interest rate is higher than the equilibrium real interest rate,
 
  A) the demand for loanable funds curve shifts rightward to restore the equilibrium.
  B) there is a surplus of investment.
  C) there is a shortage of loanable funds.
  D) the demand for loanable funds curve shifts leftward to restore the equilibrium.
  E) there is a surplus of loanable funds.


bookworm410

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Reply #1 on: Jun 29, 2018
Answer to Question 1

The aggregate demand curve is derived using the aggregate planned expenditure curve. The aggregate planned expenditure curve shows how equilibrium expenditure changes when the price level changes. Then the aggregate demand curve plots the price level and the resulting equilibrium expenditure to illustrate how equilibrium expenditure (and hence the aggregate quantity of real GDP demanded) depends on the price level.

Answer to Question 2

E


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