Question
Asked Nov 3, 2019
2 views

2. Briefly explain why the following would cause the Aggregate Demand curve to shift to the right(an increase), or to the left(a decrease):
an increase in interest rates

check_circle

Expert Answer

Step 1

Aggregate demand   = C + I + G + (X-M), C= consumption, I= Investment, G= Government spending, (X-M) = Net exports

 

The increase in interest rates will lead to an increase in savings as consumers receive greater...

Want to see the full answer?

See Solution

Check out a sample Q&A here.

Want to see this answer and more?

Solutions are written by subject experts who are available 24/7. Questions are typically answered within 1 hour.*

See Solution
*Response times may vary by subject and question.
Tagged in

Business

Economics

Aggregate Demand

Related Economics Q&A

Find answers to questions asked by student like you

Show more Q&A add
question_answer

Q: What is the difference between scarcity and poverty?

A: Poverty:Poverty refers to the economic situation of the people in which they are not able to afford ...

question_answer

Q: Saved Help Save&Exit Submit Quantity Supplied Quantity Price Demanded $6 300 $1 10 250 $2 50 180 $3 ...

A: If there is no tax, the market will sell the product at the equilibrium price.

question_answer

Q: Help Sav 0 Homework Saved The investment demand curve for a country is shown on the graph below. Sup...

A: The investment demand curve reflects a negative relationship between investment demand and interest ...

question_answer

Q: 1. One-Shot, Pricing Game. You are a pricing manager at Argyle Inc.-a medium-sized firm that recentl...

A: The Mr. A and Mr. B are the two firm that are competing against each other. Mr. B’s want to maximize...

question_answer

Q: elaborate 2 main components of money based on the narrowest definition of money

A: Narrowest definition money or M1 refers to the sum of currency held with the public, demand deposits...

question_answer

Q: Thoroughly explain the components of GDP and relate those components to the Circular Flow model with...

A: The components of GDP are:1. Consumption expenditure2. Investment expenditure3. Government expenditu...

question_answer

Q: Think about the market for parking spaces in downtown LA. There is little flexibility in terms of ch...

A: a.When the demand for the parking lot is high in the town and the availability of the parking slots ...

question_answer

Q: Suppose in a year an American worker can produce 100 shirts or 20 computers, while a Chinese worker ...

A: A Production Possibility Curve (PPC) is a graph that shows all the possible combinations of two comm...

question_answer

Q: Show that the two utility functions given below generate identical demand functions for goods X and​...

A: Utility function with the same marginal rate of substitution (MRS) will going to generate the same d...