Explain what causes shifts in the LM curve.

Q: Use the Aggregate supply and Aggregate Demand Model below to answer the questions that follow.…

A: The aggregate demand is the total quantity of commodities and services that are purchased by people…

Q: Explain why aggregate demand (AD) curve is negatively sloped by taking the link between the goods…

A: Goods market is a market where the trade of final services and commodities takes place. In this…

Q: Changes in price levels induce shifts in the aggregate expenditure function. Which of these is not a…

A: The answer is - Substitution effect

Q: What is the long run aggregate supply curve

A: An aggregate supply curve shows the relationship between the output produced in an economy and the…

Q: Explain the LM schedule, and how the LM curve is derived in a Closed Economy.

A: LM stands for money liquidity in macroeconomic terms. The demand for money falls/decrease as there…

Q: Discuss the various factors affect aggregate supply curve shift.

A: The aggregate supply curve is one of the most determinant of the determination of the output or the…

Q: What impact would a decrease in the size of the labor force have on GDP and the price level…

A: ANS If the labor force decreases then less number of labors will be available to works and thus the…

Q: inventory

A: Inventory refers to all the goods and even finished commodities that are held by a firm in stock for…

Q: Explain THREE (3) reasons why the AD curve slopes downward.

A: There is inverse relationship between price and quantity demanded as demand law and att macro level…

Q: As you know, supply and demand shifts are caused by one of their determinants. Shifts in aggregate…

A: (1) Micro event : Demand curve shifts out (2) Macro event : AD shifts out (3) Micro issue : Supply…

Q: Suppose concerns about the size of the federal budget deficit lead the U.S. Congress to cut all…

A: As technology growth falls, production becomes less efficient. This leads producers to produce less,…

Q: What does each point on the IS curve represent? What does each point on LM curve represent? What…

A: The IS-LM model represents the intersection of the money market and the goods market. The IS in…

Q: State whether each of the following transactions is a part of aggregate demand in the United States,…

A: Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…

Q: An increase in expected future taxes will cause: the IS curve to shift right in the current period…

A: IS curve depicts the combination of interest rate and output level which clears the goods market…

Q: Suppose the U.S. Congress passes significant immigration reform that makes it more difficult for…

A: If the U.S passes the notable immigration reforms as portrayed would decrease the supply of labour…

Q: Illustrate graphically and explain the derivation of the aggregate demand curve from the IS and LM…

A: IS-LM: The IS-LM is an macroeconomic model that describes how the money market interacts with the…

Q: Use the Aggregate supply and Aggregate Demand Model below to answer the questions that follow.…

A: When the government increases its expenditure on investment leads to an increase in the aggregate…

Q: An increase in the aggregate price level, P, will most likely have which of the following effects?…

A: IS-LM: The IS-LM is a macroeconomic model that describes how the money and product markets interact…

Q: 3. Supply and Demand Shifts Read the article at the end of this exam entitled “Gen Z Isn't That Into…

A: Here, the given paragraph explains the market condition of restaurants. It can be seen that there is…

Q: State whether each of the following transactions is a part of aggregate demand in the United States,…

A: Aggregate Demand: It is the value of all spending by the domestic residents, firms, agencies of…

Q: In the long run, an increase in AD will result in: no change in the aggregate price level. increases…

A: shifting of demand curve can cause changes in price level so we can choose the correct option as…

Q: Assume an economy is currently operating at point A. Illustrate using the IS-LM model how the policy…

A: Simultaneous equilibrium in both goods and money market is determined by the intersection of the IS…

Q: Briefly explain what effect and why, a slowdown in Technological progress would have on the…

A: A slow down in technological progress would affect the aggregate supply as it is directly related to…

Q: An increase in government purchases will shift the IS curve up. shift the LM curve down. shift the…

A: An increase in government purchases will shift the IS curve up. Reason: As the government spending…

Q: Use the AD/AS model to explain the likely short run impacts on US GDP and the aggregate price level.…

A:

Q: Use the Aggregate supply and Aggregate Demand Model below to answer the questions that follow.…

A: There is an increase in the aggregate demand (AD) in the economy when the Government increases its…

Q: Draw diagram of a typical IS-LMmodel and indicate the changes in all the variables on the diagram…

A: The IS-LM model describes how goods market and money markets interact to balance the rate of…

Q: Derive the AD curve using the IS-LM model.

A: DERIVATION OF AD CURVE FROM IS-LM MODEL:

Q: Name some factors that could cause AD to shift, and say whether they would shift AD to the right or…

A: Aggregate demand refers to the average amount of goods or services demanded in the economy by the…

Q: Identify and explain what will happen to the price level and Real GDP (in the short run) as a result…

A: Aggregate supply curve shows the various amount of aggregate output which the producers in the…

Q: In the Keynesian short-run macro model, a fall in the money supply will a)move the economy to the…

A: Aggregate expenditure is the sum of consumption spending, investment spending, government purchases…

Q: 13.8 For each of the following scenarios, choose whether the short-run aggregate supply (SRAS) curve…

A: Short run aggregate supply curve shows the total amount of production of goods and services in the…

Q: If investment as a fraction of GDP rose substantially and then stayed at a high level, what would be…

A: In macroeconomics, the term “aggregate supply” refers to the total volume of goods and services…

Q: 11. Complete the following sentence: In terms of the AD-AS model, a decrease in the interest rate…

A: We will answer the first question since the exact one was not specified. Please submit a new…

Q: Use the Aggregate Supply and Aggregate Demand Model below to answer the questions that follow…

A: The AS-AD model is one of the most important model of macroeconomics. Equilibrium occurs at the…

Q: Assume an economy operates  in the intermediate range of its AS curve (upward sloping AS curve).…

A: a. A rise in the price of crude oil will shift the AS curve to the left as the aggregate supply will…

Q: Why does the LM curve slope upward

A: LM: LM means the Liquidity Preference-Money Supply. So, equilibrium in the money market is depicted…