The aggregate demand curve slopes downward because when the price level is lower, people can afford to buy more, and aggregate demand rises. When prices rise, people can afford to buy less, and aggregate demand falls. Is this a good explanation of the shape of the aggregate demand curve? Why and why not?
The aggregate demand curve slopes downward because when the price level is lower, people can afford to buy more, and aggregate demand rises. When prices rise, people can afford to buy less, and aggregate demand falls. Is this a good explanation of the shape of the aggregate demand curve? Why and why not?
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26. Consumption (household sector) spending is the largest component of
| Aggregate employment | |
| Aggregate demand | |
| Aggregate supply | |
| Aggregate income | |
| Aggregate output |
27. The aggregate demand curve slopes down, because of the inverse relationship between the price level and real output (GDP).
| True | |
| False |
28. What happens to the aggregate supply curve when the government imposes an excise tax on production?
| Increases by more than the tax | |
| Remains the same | |
| Shifts to the right | |
| reaches a neutral point | |
| Shifts to the left |
29. Suppose National Bank has required reserves of $1,000 and actual reserves of $5,000. National Bank' s lending ability is___________.
| $6,000 | |
| $1,000 | |
| $2,000 | |
| $5,000 | |
| $4,000 |
30. A decrease in the per-unit cost will shift the aggregate supply curve
| Middle ward | |
| Leftward | |
| Will not shift the curve | |
| Downward to the right | |
| Rightward |
