ch 32 Econ
If the price level decreases, then the aggregate expenditures schedule will shift. This translates into a
movement down along the aggregate demand curve.
the labels for axes of an aggregate supply curve should be
real domestic output for the horizontal axis and price level for the vertical axis
If investment increases by $10 billion and the economy's MPC is 0.8, the aggregate demand curve will shift
rightward by $50 billion at each price level
Graphically, demand-pull inflation is shown as a:
rightward shift of the AD curve along an upsloping AS curve.
table
whats the point
the real life balances effect indicates that
a higher price level will decrease the real value of many financial assets and therefore reduce spending.
An increase in investment and government spending can be expected to shift the
aggregate expenditures curve upward and the aggregate demand curve rightward.
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other things equal, a decrease in the real interest rate will
expand investment and shift the AD curve to the right
the immediate short run aggregate supply curve is
horizontal
The foreign purchases effect suggests that a decrease in the U.S. price level relative to other countries will
increase US exports and decrease US imports
the aggregate demand curve
shows the amount of real output that will be purchased at each possible price level.