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Price level is graphed on the Y-axis and RGDP is graphed on the X-axis, both are increasing away from the origin. When price level is higher RGDP is lower, (stuff is more expensive so people buy less). When price level is lower, RGDP increases.
The Real Wealth Effect: a fixed amount of wealth will lose purchasing power if prices go up, consumption will decrease
The Interest Rate Effect: Higher price levels create a greater demand for money, this causes interest rates to go up which causes investment to go down, which affects the Aggregate Demand
The Open Economy Effect: if it is cheaper to buy a product from a different country, consumers will do so. This affects Net Exports.
What else can I help you with?
True or False The real wealth effect is one reason for the negative slope of the aggregate demand curve?
true
How would war affect aggregate demand and what happens to output and the price level?
As war is an unexpected factor that impedes the economic growth of a country, it leaves the aggregate demand with no option but a slope negatively downwards in dicating higher price levels.
Is the price elasticity constant along the demand curve?
Price elasticity of demand is equal to the instantaneous slope of the demand curve, or the slope of the tangent line at any point on the demand curve. So if the demand curve is represented by a straight downward sloping line, then yes, price elasticity of demand is equal to the slope of the demand curve. Otherwise, the slope at any point on the curve is changing, and you can find the it by taking the derivative of the demand curve function, which will find the Price elasticity of demand at any single point. Thus, the Price Elasticity of Demand changes at different points on the demand curve.
What is difference between slope and the calculation of elasticity for a linear demand curve?
Along a linear demand curve elasticity varies from point to point of the demand curve with respect to different price, but slope is constant
What is the typical slope of a demand curve?
Downward
True or False The real wealth effect is one reason for the negative slope of the aggregate demand curve?
true
How would war affect aggregate demand and what happens to output and the price level?
As war is an unexpected factor that impedes the economic growth of a country, it leaves the aggregate demand with no option but a slope negatively downwards in dicating higher price levels.
Is the price elasticity constant along the demand curve?
Price elasticity of demand is equal to the instantaneous slope of the demand curve, or the slope of the tangent line at any point on the demand curve. So if the demand curve is represented by a straight downward sloping line, then yes, price elasticity of demand is equal to the slope of the demand curve. Otherwise, the slope at any point on the curve is changing, and you can find the it by taking the derivative of the demand curve function, which will find the Price elasticity of demand at any single point. Thus, the Price Elasticity of Demand changes at different points on the demand curve.
What is difference between slope and the calculation of elasticity for a linear demand curve?
Along a linear demand curve elasticity varies from point to point of the demand curve with respect to different price, but slope is constant
What is the typical slope of a demand curve?
Downward
Which direction does the demand curve slope?
Is always negative. (should be in all caps for emphasis)
Is demand curve canbe upwardly sloping?
A demand curve can have an upwards slope. It solely depends on if the demand for an item is high or low.
How can one calculate marginal revenue from a demand curve?
To calculate marginal revenue from a demand curve, you can find the slope of the demand curve at a specific quantity using calculus or by taking the first derivative of the demand function. The marginal revenue is then equal to the price at that quantity minus the slope of the demand curve multiplied by the quantity.
Demand curve slopes downwards from left to right. this is the negative slope that shows the inverse relationship between price and demand. explain why does the demand curve slope downwards?
because demand decreases as price increases :)
How the slope of the demand curve can be explained by the principle of marginal utility?
The demand curve is negatively sloped because it is based on the principle of marginal utility and this utility decreases as consumption increases. The demand price which depends on the marginal utility of a good also declines as consumption increases, so quantity and price are inversely related, leading to the negative curve and the law of demand.
How does the principle of diminishing marginal utility explain the slope of the demand curve?
The principle of diminishing marginal utility explains the slope of the demand curve by letting us be able to see which direction the slope is in, which is always downward.
What is the paradoxical demand curve?
Paradoxical demand curve is a theory that the slope of a product will change a different times. This is called Griffin's Paradox.
