Question 1 The AD curve is downward sloping because of three effects (not includ

Question

Question 1 The AD curve is downward sloping because of three effects (not including the multiplier): the interest rate effect, the money wealth effect, and the international effect. Identify the interest rate effect from the responses below If the price level increases people will have to withdraw more money from their bank accounts to use for goods and services, which decreases the amount banks can loan. This increases the interest rate and moves us upward along the AD curve Holding price level constant, when the interest rate decreases, more investment spending happens which will increase AD o If the price level decreases, people can afford more goods and services, which increases consumption spending and moves us downward along the AD curve. More than one of the answers above is correct. Question 2 1 pts Assume Chinese people on average have fast-rising income as a result of positive economic growth. How might this affect the AD curve for the United States? The United States' AD curve will shift outward because of an increase in US EXPORTS This will not affect the United States, it only will affect China. The United States' AD curve will shift outward because of an increase in US IMPORTS The United States' AD curve will shift outward because of an increase in CONSUMPTION O The United States' AD curve will shift inward because of an increase in IMPORTS The United States' AD curve will shift inward because of an increase in EXPORTS Question 3 How is the "short run" defined in macroeconomics? The time period when some resource prices are fixed (usually wage contracts) 12 months 9 months the time it takes for firms to increase or decrease output

Explanation / Answer

Ans

1 A is right. All other options are irrelevant

2 A is right. Chinese demand more goods from USA as their income rises. Hence usa Aggregate demand and exports rise

3 A is right. In long run prices like wages can change. Note D is case of shortrun of microeconomics

100% sure about answer. Please please like answer

Related Questions

Navigate

• Browse (All)
• Browse Q
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.