Answer:
According to the classical theory of inflation, an increase in the money supply would cause aggregate demand curve to shift to the right. Output would increase and price level would increase. However, in the long run, would shift to the left. Output would reduce and the price level would continue to increase.
Explanation:
Inflation occurs in an economy when the overall price level increases and the demand of goods and services increases.
the classical theory of inflation explains how the aggregate price level gets determined through the interaction between money supply and money demand.
Tn the classical theory of inflation:
- Money is considered the asset which is utilized by people to purchase goods and services on a regular basis.
- Their view is that the general price is determined by the total demand for and total supply of goods just as the price of any good is determined by the forces of demand and supply for it.
- According to them inflation is a situation caused by excess demand, in which the total demand for goods as measured by the volume of money offered is in excess of supply of goods at prevailing prices.
Answer:
Autonomous consumption is <u>$1,000</u> and the marginal propensity to consume is <u>0.9</u>.
A consumer whose income increases by $100 will increase consumption by <u>$90</u>.
Explanation:
Given C = 1000 + 0.9Y
Autonomous consumption refers to consumption expenditure of consumers that does not depend on income. Therefore, autonomous consumption is therefore the consumption expenditure made by the consumers when they do not have income or when income is zero (i.e. when Y = 0).
Substituting for Y = 0 into the consumption function, we can obtain autonomous consumption is follows:
Autonomous consumption = 1000 + (0.9 * 0) = 1,000
The marginal propensity to consume refers to the proportion of the increase in disposable income that is spent on the consumption of goods and services by a consumer. From the consumption function, the marginal propensity to consume is 0.9.
Since marginal propensity to consume is 0.9, a consumer whose income increases by $100 will therefore increase consumption by $90 (i.e. $100 * 0.9 = $90).
Answer:
free to share their voice
Explanation:
Brainstorming helps coworkers "free to share their voice."
This is because Brainstorming is an act in which people or coworkers or employees come together to share varying thoughts, ideas, and opinions about a particular topic or issue to solve the problem involved.
It is an informal way of getting ideas to solve issues.
The answers are supply and demand.
