econ 181

1. The three reasons for the downward slope of the aggregated demand curve are measured in effect. They are: Real Balances-this is caused by a change in the price levels. Next are Interest Rates-here high price levels increases the demand for money. When the supply is fixed the demand drives up the price. This price is the interest rate. Foreign Purchases-occur when the United States price levels increase relative to those overseas (and the exchange doesn't respond fast enough or completely), then the foreign markets buy more foreign goods. This reduces the number of US goods and creates a rise in exports.
2. The three major factors that can cause a shift in the aggregated supply curve are: Changes in Consumer Spending, which deals with price changes. Investment Spending is the plying of capital goods. Government Spending is the increase in it's purchases, a shift in the curve, as long as taxes and interest rates don't change as a result.

Hummmmmmm. What, exactly are the questions you are trying to answer.

In 1) I sense you are confused between aggregate demand for goods and services and aggregate demand for money. Demand curves are simply relationships between price and quantity. (The price of holding money is the interest rate). Demand curves are downward sloping because at higher prices, people want to hold/consume less.

In 2) changes in consumer spending changes the aggregate demand curve, not supply. Changes in investment spending, in the short run, are also changes to aggregate demand. Government spending is also a component of aggregate demand.
Factors that affect supply are levels of technology, levels of factors of production (labor, capital, natural resources), etc.

  1. 👍 0
  2. 👎 0
  3. 👁 180

Respond to this Question

First Name

Your Response

Similar Questions

  1. econ

    in what ways do the reasons that explain the downward slope of the aggregate demand curve differ from the reasons that explain the slope of the demand curve for a single product?

    asked by ari on October 23, 2008
  2. macroeconomics

    In each of the following cases, either a recessionary gap or inflationary gap exists. Assume that the aggregated supply curve is horizontal so that the change in real GDP arising from a shift of the aggregated demand curve equals

    asked by Jacqui on March 22, 2010
  3. Macro econ

    Why does the supply of saving slope upward? Why does the investment demand slope downward? Identify the equilibrium in the market. If this is the standard curve, savers will save more when the rate of return, i.e. interest paid,

    asked by Logan on July 17, 2006
  4. managerial economics

    Exercise 1 The marketing manager has estimated the company’s demand curve with the equation P=3000 – 40Q. To develop a deeper understanding of pricing and quantity to be produced, complete the following analyses: 1. Draw the

    asked by Butter on February 20, 2012
  5. Economics

    How can you obtain a downward sloping market demand curve from a horizontal firm demand curve experiencing perfect competition? If you sum up individual demand horizontally for the firm at the given market price will market demad

    asked by Samantha on October 4, 2007
  1. Econ

    For a typical negative externality market graph, with Demand curve (also labelled private value), and supply curve (private cost) and a social cost curve above the supply curve. What is the optimal quantity that maximizes total

    asked by Anonymous on March 5, 2007
  2. Microeconomics

    The labor demand curve of a purely competitive seller: What exactly is your question? Is it something like: what is the slope (elasticity) of the demand for labor labor faced by a producer who sells in a perfectly competitive

    asked by Anonymous on October 31, 2006

    suppose that DVD player producers find that they are selling more DVD players at the same price than they did 2 years ago. is it a shift of demand curve or a movement along the demand curve? suggest at least four reasons why this

    asked by cheza on January 23, 2011
  4. economics

    Can you please exlain to me if I'm wrong not just correct me. ps. Ceteris paribusor the following markets, show whether change causes a shift in supply curve, a shift in demand curve, a movement along the supply curve, and/or a

    asked by allie on September 26, 2011
  5. Economics

    Help me with this, please. Read the statement. Economists note that personal income rose by 5 percent last year. What impact will the change in personal income have on-demand? It will cause the demand curve to shift down. It will

    asked by Emma on October 31, 2019

More Similar Questions