Answer:
Money supply increases causing the interest rate to decrease. investment spending will increase and the AD curve will shift to the right. price level however does not change.
Explanation:
Because the AS curve is horizontal there is a liquidity trap. During a liquidity trap, monetary policy is MOST EFFECTIVE. When money supply increases it causes an excess of money in the economy causing a drop(decrease) in the interest rate. The subsequent drop in the interest rate causes people to increase investment, which causes investment spending to rise(increase). This increase in investment spending causing the Aggregate Demand(AD) curve to move right. The price level does not change because the AS curve is horizontal and pegged at a given price level. So no matter the Demand the supply will only be at that constant price.
Answer:
True
Explanation:
The reason why every business exists is to make a profit. Hopefully businesses will be able to make a profit by selling products or services that satisfy the needs of their customers. The problem with higher profits is that they are always associated with higher risks, and business owners and investors are risk averse.
Business owners and managers will continually search for ways to increase their profits while keeping the risks as low as possible. This includes choosing organizational layouts and forms that might help them increase their profits while reducing risks or at least keeping them under a certain level.
Transfer payments are not included in the GDP calculation because they are transfers of income within one organization or group to group. Transfer payments are not used to purchase a good or service. Examples of transfer payments are social security, students grants, unemployment pay and others.
Answer:
Option (2) is correct.
Explanation:
A supply curve is a graphical representation of quantity supplied of a commodity at every price level. The law of supply states that there is a direct relationship between the price of the product and the quantity supplied of the product.
This is one of the main reason of upward sloping supply curve. This means that as the price of a product increases then as a result the quantity supplied for that good also increases.
Demand curve is a downward sloping curve which shows that there is an inverse relationship between the price of the good and the quantity demanded for that good.