ECN 204 Chapter Notes - Chapter 10: Aggregate Supply, Aggregate Demand, Government Spending

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amaranthmanatee702

21 Apr 2011

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consumer spending: demand of output will shift the curve. Other factors that effects consumer spending are: consumer wealth, consumer expectations, household borrowing, personal taxes. Investment spending: decline in investment spending at each price level will shift the ad curve to the left (vice versa): www. notesolution. com: real interest rates, expected returns: expectations about future business conditions; technology; degree of excess capacity; business taxes. net export spending: based on national income abroad; and. Input prices: domestic resource prices (wages and salary) * per unit cost decrease, as curve shift to the right (vice versa: labour supply increases because of substantial immigration. legal instituational environement: changes may alter the per-unit cost and therefore shift the supply curve. Such changes are: business taxes and subsidies: higher business taxes increase per-unit cost, reducing as. A business subsidy lowers production costs and increase as: government regulation: more regulations lead to increased production costs .

Related Questions

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. What role do imports play in aggregate demand? Under which conditions will changes in imports expand aggregate demand? Reduce aggregate demand?

6. Shifts in the Aggregate Supply Curves

List and discuss the things that will make the Short Run Aggregate Supply curve shift to the left or to the right. Illustrate.

List and discuss the things that will make the Long Run Aggregate Supply curve shift to the left or to the right. Illustrate.

7. What is the natural level of output?

scarletraven382

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

ECN 204 Chapter Notes - Chapter 10: Aggregate Supply, Aggregate Demand, Government Spending

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