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Fiscal and monetary policies are used to shift the aggregate supply curve or the aggregate demand curve?
Aggregate demand curve.
How would a rise in the business investment affect the aggregate demand curve?
The aggregate demand curve shifts to the right
What the primary difference between aggregate demand curve and individual demand curve?
aggregate demand curve is the total sum of all the individual demand curves while individual demand curve is the demand made by the single individual.
Is it true and an economy's aggregate demand curve shifts leftward or rightward by more than changes in initial spending because of the multiplier effect?
Yes, it is true that an economy's aggregate demand curve can shift leftward or rightward by more than the initial changes in spending due to the multiplier effect. When there is an increase in spending, it leads to a greater overall increase in aggregate demand as the initial spending circulates through the economy, prompting further consumption and investment. Conversely, a decrease in spending can lead to a more significant decrease in aggregate demand as the initial reduction also results in reduced income and spending by others. This magnification effect illustrates how initial changes in spending can have a compounding impact on overall demand.
Ceteris paribus the price level will fall when A The aggregate supply curve shifts to the left B The aggregate demand curve shifts to the left C The aggregate demand curve shifts to the right?
b
Fiscal and monetary policies are used to shift the aggregate supply curve or the aggregate demand curve?
Aggregate demand curve.
How would a rise in business affect the aggregate demand curve?
The aggregate demand curve shifts to the right
How would a rise in the business investment affect the aggregate demand curve?
The aggregate demand curve shifts to the right
What the primary difference between aggregate demand curve and individual demand curve?
aggregate demand curve is the total sum of all the individual demand curves while individual demand curve is the demand made by the single individual.
Is it true and an economy's aggregate demand curve shifts leftward or rightward by more than changes in initial spending because of the multiplier effect?
Yes, it is true that an economy's aggregate demand curve can shift leftward or rightward by more than the initial changes in spending due to the multiplier effect. When there is an increase in spending, it leads to a greater overall increase in aggregate demand as the initial spending circulates through the economy, prompting further consumption and investment. Conversely, a decrease in spending can lead to a more significant decrease in aggregate demand as the initial reduction also results in reduced income and spending by others. This magnification effect illustrates how initial changes in spending can have a compounding impact on overall demand.
Aggregate demand and Aggregate supply curve?
The aggregate demand curve show what consumers are willing to buy at a given price level, whereas the aggregate supply curve shows what producers are willing to produce at a given price level.
Ceteris paribus the price level will fall when A The aggregate supply curve shifts to the left B The aggregate demand curve shifts to the left C The aggregate demand curve shifts to the right?
b
Using the AD-AS framework what is the impact on equilibrium price and output when there are increase in aggregate demand and aggregate supply simultaneously?
AD-AS represents aggregate demand curve (AD) and aggregate supply curve (AS). "In the aggregate demand-aggregate supply model, each point on the aggregate demand curve is an outcome of the IS-LM model for aggregate demand Y based on a particular price level. Starting from one point on the aggregate demand curve, at a particular price level and a quantity of aggregate demand implied by the IS-LM model for that price level, if one considers a higher potential price level, in the IS-LM model the real money supply M/P will be lower and hence the LM curve will be shifted higher, leading to lower aggregate demand; hence at the higher price level the level of aggregate demand is lower, so the aggregate demand curve is negatively sloped
Can the aggregate demand curve move independently of the aggregate supply curve?
Yes, the aggregate demand curve can move independently of the aggregate supply curve. Factors such as changes in consumer confidence, monetary policy, and fiscal policy can shift the aggregate demand curve without directly affecting aggregate supply. For example, an increase in government spending can boost aggregate demand while aggregate supply remains unchanged in the short term. However, over time, changes in demand can influence supply as businesses adjust to new economic conditions.
Explain movements along the aggregate demand curve and shifts of the aggregate demand curve?
Movements along the aggregate demand curve are caused by changes in price level - real wealth effect, interest rate effect and open economy effect. If some non-price level determinant causes total spending to increase/decrease then the curve will shift to the right/left - consumption, investment, government expenditure, net exports.
What relationship is shown by the aggregate demand curve?
The aggregate demand curve shows the relationship between the total quantity of goods and services demanded in an economy at different price levels.
An increase in taxes shifts the aggregate demand curve to the?
Left
