ECON 1100 Study Guide - Final Guide: Bell System, Bank Reserves, Foreign Exchange Market

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periwinklefox383

12 Oct 2016

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Chapter 9: aggregate demand & aggregate supply analysis: Aggregate demand and aggregate supply model: a model that explains sr fluctuations in real gdp and the pl. Price level: a measure of the average prices of g&s"s in the economy. Aggregate demand (ad) curve: a curve that shows the relationship between the price level and the q of real gdp demanded by households, firms, and the gov. Short-run aggregate supply (sras) curve: a curve that shows the relationship in the sr between the price level and the q of real gdp supplied by firms. The ad curve is downward sloping because a fall in the price level increases the q of real gdp demanded. The wealth effect: how a change in the price level affects consumption: As incomes rise, consumption rises; as income falls, consumption falls. A household"s wealth is the difference between the value of it"s assets and the value of it"s debts.

Related Questions

Which of the following is correct?

a)the intersection of the aggregate demand and aggregate supply curves determines the equilibrium price and quantity of a single good.

b)The aggregate demand curve indicates a positive relationship between the price level and GDP.

c)The intersection of the aggregate demand and aggregate supply curves determines the equilibrium price and quantity.

d)The intersection of the aggregate demand and aggregate supply curves determines the equilibrium price level and the equilibrium level of real GDP.

e)Other things equal, a downward shift of the aggregate demand curve implies that the economy enters an expansionary phase.

erinhyena808

The aggregate demand curve illustrates the relationship between

a. the price level and the potential demand for real GDP.

b. the price level and the potential quantity demanded of real GDP.

c. the price level and the number of goods supplied by firms.

d. the price level and the quantity of goods demanded by households, firms, government, and foreigners.

raspberrygoat38

1. Discuss the difference between an increase in the aggregate demand curve and an increase in the quantity of real GDP demanded. Include a discussion of how the price level relates to each event.

2. What are the major factors that determine investment, and what impact does each have on aggregate demand?

3. Describe the difference between a microeconomic demand curve and an aggregate demand curve.

4. The aggregate demand curve portrays the relationship between the price level and real GDP. What are the three reasons this relationship is a negative or inverse relationship? Provide brief illustrations of each.

5. Explain how changes in the stock of capital affect aggregate supply.

6. What is the natural level of output?

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ECON 1100 Study Guide - Final Guide: Bell System, Bank Reserves, Foreign Exchange Market

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