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2 years ago

Why the aggregate demand curve slopes downward

Business

1 answer:

Serggg [28]2 years ago

4 0

Answer:

1. As the price level rises, the cost of borrowing money will rise, causing the quantity of output demanded to fall.

This phenomenon is known as the Interest rate effect.

When price levels rise, people will have to spend more on goods and services and hence save less. As they save less there'll be less loanable funds in the economy which will force interest rates (cost of borrowing) up. As there are less loans to give out and higher rates, people will borrow less and as a result will not demand as much because they can't afford it.

2. Additionally, as the price level rises, the impact on the domestic interest rate will cause the real value of the dollar to rise in foreign exchange markets. The number of domestic products purchased by foreigners (exports) will therefore fall, and the number of foreign products purchased by domestic consumers and firms (imports) will rise. Net exports will therefore fall, causing the quantity of domestic output demanded to fall. This phenomenon is known as the exchange rate effect.

As interest rates rise in the Economy, it will make the country a more attractive place to invest for foreigners so they will demand more of the local currency. This will cause a rise in the value of the domestic currency. This will make the exports of the country more expensive so less people outside will buy it but it will also make foreign products seem cheaper so the local consumers will import more.

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Person A earns $100,000 per year, while person B earns $45,000 per year.

USPshnik [31]

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3 years ago

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In the recent past, the government has attempted to stimulate the economy by sending tax refunds to individual people so that th

blondinia [14]

Answer:

The correct answer to the following question will be "Consumption".

Explanation:

Investments, welfare spending, consumer spending are essential elements of GDP. That tells them what a nation is doing well. For every year, GDP is the world's total economic production.

Expenditure on resources consumption includes:

Durable goods (Furniture, cars, etc).
Non-durable goods (Oils. clothing, etc).
Services (Education, health, etc).

Therefore, it's the right answer.

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2 years ago

Suppose that, due to exceptionally good weather in the Mid West, the United States experiences an increase in grain production i

Eva8 [605]

In this question, we are not provided with the specific numbers that are necessary to produce a graphical approach. Therefore, we cannot provide that part of the answer. However, we are able to talk, in general terms, about what an increase of grain production in the United States would cause in the rest of the world.

This is an effect of what is known as globalization. Globalization refers to the integration of the world's markets in goods and services, as well as flows of investment and people across national boundaries.

In order for globalization to take place, several processes have to occur first. Nations begin specializing in the production of good and services in which they are relatively low-cost producers. This allows for mutual gains for people in trading countries. However, while some groups might benefit, some others might be harmed by this pattern, such as those producing the goods that compete with the imports. In this example, some countries might benefit, but those that compete with the United States in terms of grain production might be damaged by the increased production of the United States.

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3 years ago

Concepts like value and relationship marketing are important in designing a marketing program because such a program is what con

Andre45 [30]

Answer:

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2 years ago

Monopolists want to protect their market position by – potential competitors. A common tactic is to lobby for –, such as –. Such

mixer [17]

Answer:

restricting the entry; trade restrictions; import tariffs; rent-seeking; monopoly

Explanation:

Monopolists want to maximize their profits by keeping the potential competitors out of the market. For restricting the entry of potential firms they adopt the practice of lobbying for trade restrictions which restrict entry. One such restriction is importing tariff which will reduce competition from foreign products. Such lobbying can be defined as a form of rent-seeking which means using political means to secure monopoly position.

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2 years ago