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What happens to aggregate demand if government spending on infrastructure increases?
The Aggregate demand will shift to the right. this is because the output increases as well as the price level. When taxes decrease, it causes the shift. Th short run and Long run will also increase
What can lead to an increase in the price of a company's stock?
Typical reasons include an increase in the company's earnings, or in the value of its holdings, or its percentage of market share for its products. Stock price increases when there is a demand for the stock (buying) and will usually decrease if there is less demand (net selling).
Why is money demand downward sloping?
Money demand is always downward sloping because when the cost of holding money increases (e.g. interest rates rise) the quantity of money consumers hold decreases. This means at lower interest rates, people want to hold more money and fewer bonds.
Definition for ''law of demand''?
In economics, the law of demand states:- As the price of a good or service increases, the demand for that good or service will decrease.- As the price of a good or service decreases, the demand for that good or service will increases.
How the increase in expansion affect the demand?
Increase in expansion affect the demand because more supply/expansion with constant demand will lead to excess in expansion which affect the demand.
What is the relationship between demand for money and interest rates?
as interest rates increase, demand for money increases.
What happens to the equilibrium interest rate if the demand for loanable funds shifts to the left?
If the demand for loanable funds shifts to the left, the equilibrium interest rate will decrease.
What happens with an increase in deficit spending?
the demand for loanable funds will increase, interest rates will increase
What affects demand and supply for loanable funds?
Interest rate, time preference, consumption smoothing, inflation expectations
What happens to the real rate of interest when the demand for capital increases because technology innovations have caused the aggregate investment opportunity set to increase?
Anytime the demand for capital increases, interest rates go up. Supply and demand. The price of money is measured in interest rates.
Why interest rate has no affect on the aggregate demand?
The interest rate does affect aggregate demand. As the interest rate falls, aggregate demand increases and vice-versa.
If income increases demand is likely to?
Increase
An increase in interest rates affects aggregate demand by?
An increase in interest rates decreases the aggregate demand shifting the curve to the left.
What happens if demand and supply increase?
the price and value of the item will decrease.
When will gas prices increase?
Gas prices increase when the demand increases compared to the supply, or when the cost of oil increases (due to demand, or if raised arbitrarily by the producers).
When the population increases you can expect overall demand to?
Increase
Why interest rate spread is leading indicator?
To understand why the interest rate spread is a leading indicator, one must interpret the interest rate as the price of money. A high interest rate means that obtaining money is costly. If interest rate spreads are great, this means investors are anticipating an increase in the price of money. The price of money will increase due to an increase in the quantity of money demanded (and an increase in demand). Investors see the economy recovering, and in the process of this recovery, they see an increase in demand for money (loans etc.) to buy new capital and purchase other nondurables. Therefore the price of money increases and thus the spread increases.
