Exam (elaborations)
Macroeconomics Chapter 10 questions and answers graded A+ 2024/2025
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Macroeconomics Chapter 10 questions and answers graded A+ 2024/2025
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MacroeconomicsChapter
10
Aggregate
Demand
Curve
(AD)
-
ANSThe
curve
that
shows
the
level
of
real
GDP
purchased
by
consumers,
businesses,
government
and
foreigners
(net
exports)
at
different
possible
price
levels
during
a
time
period,
Ceteris
Paribus
Why
does
the
Aggregate
Demand
Curve
slope
downward
to
the
right?
-
ANSReal
Balances
Effect,
Interest
Rate
effect
and
Net
Export
effect
Real
Balances
Effect
-
ANSConsumer
spend
more
on
goods
and
services
because
lower
prices
make
their
dollars
more
valuable.
Interest
Rate
Effect
-
ANSAn
increase
in
the
price
level
increases
borrowing
demand
and
in
turn
higher
interest
rates,
which
discourages
consumer
spending.
Net
Export
Effect
-
ANSExports
(X)
decrease
and
imports
(M)
increase,
which
decreases
real
GDP
through
the
Net
Exports
component
(X-M).
what
can
cause
shift
in
the
Aggregate
Demand
Curve?
-
ANSConsumption
(C)
Investments
(I)
Government
Spending
(G)
Net
Exports
(X-M)
Aggregate
Supply
Curve
(AS)
-
ANSThe
curve
that
shows
the
level
of
real
GDP
produced
at
different
price
levels
during
a
time
period,
Ceteris
Paribus
Why
is
the
Keynesian
Aggregate
Supply
curve
horizontal?
-
ANSBecause
product
prices
and
wages
are
fixed
or
rigid.
3
Ranges
og
Aggregate
Supply
Curve
-
ANSKeynesian
Range,
Intermediate
Range
and
Classic
Range
How
is
Macro
Equilibrium
determined?
-
ANSEquilibrium
occurs
where
the
Aggregate
Demand
Curve
equals
the
Aggregate
Supply
Curve.
What
is
the
effect
of
an
increase
in
AD
in
the
Keynesian
Range
of
AS?
-
ANSReal
GDP
increases
while
the
price
level
remains
constant.
What
is
the
effect
of
an
increase
in
AD
in
the
Intermediate
Range
of
AS?
-
ANSBoth
Real
GDP
and
the
price
level
increase.
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