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solong [7]
3 years ago
5

Why the aggregate demand curve slopes downward

Business
1 answer:
Serggg [28]3 years ago
4 0

Answer:

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

This phenomenon is known as the <u>Interest rate</u> 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 <u>rise</u> in foreign exchange markets. The number of domestic products purchased by foreigners (exports) will therefore <u>fall</u>, and the number of foreign products purchased by domestic consumers and firms (imports) will <u>rise</u>. Net exports will therefore <u>fall</u>, causing the quantity of domestic output demanded to <u>fall</u>. This phenomenon is known as the <u>exchange rate</u> 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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On October 1, 2014, Mann Company places a new asset into service. The cost of the asset is $80,000 with an estimated 5-year life
Lelu [443]

Answer:

The correct answer is A.

Explanation:

Giving the following information:

On October 1, 2014, Mann Company places a new asset into service. The cost of the asset is $80,000 with an estimated 5-year life and $20,000 salvage value at the end of its useful life.

Annual depreciation= (original cost - salvage value)/estimated life (years)

Annual depreciation= 60,000/5=12,000

3 months depreciation= 12,000/12*3= 3,000

3 0
3 years ago
Joe is currently in consumer equilibrium by consuming cheese and crackers, such that the last cracker consumed yielded 8 utils a
Ludmilka [50]

Joe should decrease his consumption of crackers and his marginal utility from crackers will  increase and also  increase his consumption of cheese and his marginal utility from cheese will decrease .

<h3>What happens to marginal utility when consumption decreases?</h3>

According to the Law of Diminishing Marginal Utility, the additional utility derived from increasing consumption declines with each additional increase in consumption level.

What happens to marginal utility when consumption increases?

According to the law of declining marginal utility, when consumption rises, the marginal utility gained from each extra unit decreases, all other things being equal.

Why does marginal utility decrease as more is consumed?

  • Consumers will only purchase more of a specific good if the price drops since they get less satisfaction from consuming more units of that good.
  • Thus, the law of diminishing marginal value contributes to the understanding of the law of demand.

Learn more about marginal utility brainly.com/question/15149015

#SPJ4

4 0
2 years ago
Which department store carry history of whoo in the us?
MatroZZZ [7]
The department store carrying whoo is named SASA
7 0
3 years ago
A perpetuity has a PV of $ 29 comma 000. If the interest rate is 7​%, how much will the perpetuity paid every​ year
Lady bird [3.3K]

Answer:

The perpetuity payment per year was $2030

Explanation:

A perpetuity is a series of cash flows that are constant, occur after equal intervals of time and are for infinite period of time or are perpetual. Thus, it is like and annuity but with an infinite time period. The formula for the present value of of perpetuity is,

PV of Perpetuity = Cash Flow  /  r

Where,

  • r is the required rate of return

As we already know the present value of perpetuity and the required rate of return, we can input these values in the formula to calculate the annual perpetuity payment or cash flow.

29000 = Cash Flow / 0.07

29000 * 0.07  =  Cash Flow

Cash Flow = $2030

7 0
3 years ago
During the year, Blitzen Corporation had net income of $200,000, paid $40,000 in dividends to common stockholders, and paid $50,
cupoosta [38]

Answer:

e. 9.33 times

Explanation:

Data provided as per the given question

Price of share = $200,000 and $50,000

Earning per share = $40,000

The calculation of price-earnings ratio is shown below:-

Price earning ratio = Price of share ÷ Earning per share

= ($200,000 - $50,000) ÷ $40,000

= $3.75 per share

Therefore price earning ratio

= $35 ÷ $3.75

= 9.33 times

3 0
3 years ago
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