Span 3 CAC
The immediate-short-run aggregate supply curve represents circumstances where:
both input and output prices are fixed
The aggregate demand curve is..
downsloping because of the interest-rate, real-balances, and foreign purchases effects.
determinants of aggregate demand
explain shifts in the aggregate demand curve.
real balence effect
higher price will DECREASE real value of assets
immediate-short-run aggregate supply curve
horizontal
rightward shift in ag-s curve is increase
in productivity
In an effort to avoid recession, the government implements a tax rebate program, effectively cutting taxes for households. We would expect this to:
increase AG-d
the short run ag-s represents circumstances
input prices are fixed, output are flexible
A DECLINE in investment will shift the AD curve to the:
left by a multiple of the change in investment
foreign purchase effect suggests that the INCREASE in US price level relative to other countries
INCREASE US imports DECREASE US exports
interest rate effect
INCREASES in price level, INCREASES demand for money, INCREASES interest rate, DECREASES consumption and spending
foreign purchases effect
moves the economy along a fixed aggregate demand curve.
the determinants of ag-s curve
resource prices resource productivity
INCREASE net exports will shift Ag-d to?
right by a multiple of change in net exports
The Aggregate Demand curve..
shows the amount of real output that will be purchased at each possible price level.
real balance, interest rate, foreign purchase
why aggregate demand is downsloping
in diagram, long run AG-s is shown by
1, vertical
immediate short run ad-s in diagram is shown by
3, horizontal
in diagram,AG-d
4, downsloping