Which of the following are reasons the aggregate demand curve is downward sloping? Chelk all that apply. A higher price level decreases consumption through the substitution effect. A lower price level makes domestically produced goods less expensive than foreign goods. A higher price level decreases the real value of consumers' assets.
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- Real GDP Real GDPDemanded, Price Level Supplied,Billions (Price Index) Billions$100 300 $450200 250 400300 200 300400 150 200500 100 100 Use these sets of data to graph the aggregate demandand aggregate supply curves. What is the equilibriumprice level and the equilibrium level of real output inthis hypothetical economy? Is the equilibrium real output also necessarily the full-employment real output?Explain.b. Why will a price level of 150 not be an equilibriumprice level in this economy? Why not 250?c. Suppose that buyers desire to purchase $200 billion ofextra real output at each price level. Sketch in the newaggregate demand curve as AD1. What factors mightcause this change in aggregate demand? What is thenew equilibrium price level and level of real output?What are the factors other than price that can shift aggregate demand curve interms of investment and consumption? Also explain graphically.2. Why the aggregate demand curve slopes downward The graph below shows the aggregate demand (AD) curve a hypothetical economy. At point X, the quantity of output demanded is $500 billion, and the price level is 120. Movin up along the AD curve from point X to point Y, the quantity output demanded falls to $300 billion, and the price level rises to 140. PRICE LEVEL 170 140 130 120 100 90 0 100 200 300 400 500 600 OUTPUT (Billions of dollars) exchange rate As the price level rises, the purchasing power of household real wealth will demanded to 800 effect. causing the quantity of output . This phenomenon is known as the Additionally, as the price level rises, the impact on the domestic interest rate will cause the real value of the dolla in foreign exchange markets. The number of domestic products purchased by foreigners (exports) will therefore and the number of foreign products purchased domestic consumers and firms (imports) will exports will therefore domestic output demanded to…
- The aggregate supply curve shows the relationship between the price level and the: O potential GDP in the economy. O total quantity of output that suppliers collectively produce. total quantity of output that buyers collectively plan to purchase. equilibrium GDP in the economy.please draw graph specify endpoints thanks 1 The table below shows the aggregate demand for the economy of Itera. Its potential GDP (LAS) is $725. Price Index Aggregate Quantity Demanded 70 725 90 675 110 625 130 575 a. Draw the aggregate demand curve and the potential GDP (LAS) curve in the graphing area below. Plot only curve in the graphing area using the appropriate tool. Once all points have been plotted, click on the line (not tool icon will pop up. You can use this to enter exact co-ordinates for your points as needed. for the economy of Itera AS Tools 120 AD (900, 120) Potential GDP 110 100 AD2 90 80 70 400 500 600 700 800 900 Real GDP b. The equilibrium level of GDP is $ and the price index is c. There is a recessionary v gap in Itera of $ d. If aggregate demand in Itera were to increase by $150, draw the new (AD2) curve in the graphing area above. Remember to only the endpoints of the curve. e. The new equilibrium level of GDP is $ and the price index is f. Now there is…R The model of aggregate demand/aggregate supply... O Identifies the equilibrium GDP and price level as well as the gap between the equilibrium GDP and the potential GDP Identifies the potential GDP and price level as well as the gap between the price level and the inflation. O Identifies the equilibrium GDP the economy will reach in the long A run O Identifies the equilibrium quantity and price for consumer goods 10 % 5 T 6 O Y Com liji fa 887 & 7 7 U 8 4 f10 num lk. 8 ( 5 9 開
- Create a graph for an aggregate demand curve. Use the variable ‘Price Level’ for the vertical axis and ‘Real GDP’ for the horizontal axis. In your answer, explain why there is an inverse relationship between the price level and real GDP. Use your graph to illustrate your explanations. Also, discuss determinants of Aggregate Demandor factors that shift Aggregate Demand curve.10. Great Depression In 1939, with the U.S. economy not yet fully recovered from the Great Depression, President Roosevelt proclaimed that Thanksgiving would fall a week earlier than usual so that the shopping period before Christmas would be longer. Graph A Graph B LRAS Aggregate Supply Aggregate Demand Price Level LRAS Quantity of Output Price Level Aggregate Supply Aggregate Demand Quantity of OutputA Moving to another question will save this response. Question 26 The accompanying table shows the aggregate demand and aggregate supply schedule for a hypothetical economy. Real Domestic Output Demanded Real Domestic Output Price Level (in Billions) (Index Value) Supplied $ 500 350 $ 3,500 1,000 300 3,000 1,500 250 2,500 2,000 200 2,000 2,500 150 1,500 3,000 100 1,000 a. If the quantity of real domestic output demanded increased by $1,000 at each price level, the new equilibrium price level and quantity of real domestic output would be? I b. At the price level of 150, what will happen to the levels of output supplied and output demanded? what will generally happen in the economy? For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac). 自Q
- 1. How is the aggregate demand curve different from the demand curve for a single good, like hamburgers? 2. Why does the aggregate demand curve slope downward? 3. How does an increase in foreign income affect domestic aggregate expenditures and demand? 4. How does a decrease in foreign price levels affect domestic aggregate expenditures and demand? 5. How is the aggregate supply curve different from the supply curve for a single good, like pizza?130 120 SAS 110 A 100 AD 90 15.0 15.5 16.0 16.5 17.0 17.5 Real GDP (trillions of 2009 dollars) In the above figure, the economy is at point A when changes occur. If the new equilibrium has a price level of 100 and real GDP of $15.0 trillion, then it must be the case tha aggregate supply has increased. aggregate supply has decreased. aggregate demand has increased. O aggregate demand has decreased Price level (GDP deflator, 2009-100)Refer to the table below. Real Output Demanded, Billions Price Level Real Output Supplied, Billions $ 506 108 $ 513 508 104 512 510 100 510 512 96 507 514 92 502 Instructions: Enter your anwers as whole numbers. A). What is the equilibrium level of output? What is the equilibrium price level? B). Suppose that aggregate demand increases such that the amount of real output demanded rises by $ 7 billion at each price level. Insert the new values for real output demanded in the table below. Real Output Demanded, Billions New Real Output Demanded, Billions Price Level Real Output Supplied, Billions $ 506 108 $ 513 508 104 512 510 100 510 512 96 507 514 92 502 What is the new equilibrium level of output? What is the new equilibrium price level? By what percentage will the price level increase? Will this inflation be demand-pull inflation or will it be cost-push inflation? C) If potential real GDP ( that is, full-employment GDP) is $ 510…